Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Norwich Electric Tramways Bill [Lords].

Sharpness Docks and Gloucester and Birmingham Navigation Bill [Lords].

West Hampshire water bill.

As amended, considered; to be read the Third time.

Rhyl Urban District Council Bill (by Order).

As amended, considered; to be read the Third time.

Ministry of Health Provisional Order (Guildford) Bill.

Read a Second time, and committed.

TRAMWAYS AND LIGHT RAILWAYS (STREET AND ROAD) AND TROLLEY VEHICLE UNDERTAKINGS.

Return Ordered,
of Street and Road Tramways and Light Railways authorised by Act or Order, showing the amount of capital authorised, paid up, and expended; the length of line authorised and the length open for traffic, and number of cars owned at the 31st day of December, 1934, in respect of companies, and the end of the financial year 1934–35 in respect of local authorities; the gross receipts, working expenditure, net receipts and appropriations, the transactions in reserve funds, and traffic and operating statistics for the year ended on the foregoing dates, respectively (in continuation of Return to an Order of the House, dated the 27th day of March, 1934); also similar particulars relating to Trolley Vehicle Undertakings.—[Captain Austin Hudson.]

Oral Answers to Questions — ABYSSINIA.

Mr. MANDER: 2.
asked the Secretary of State for Foreign Affairs whether it is proposed to negotiate for a pact
guaranteeing the independence of Abyssinia on the lines of the one proposed in the case of Austria

The LORD PRESIDENT of the COUNCIL (Mr. Baldwin): No, Sir. By the Tripartite Agreement of 1906, which is still in force, France, Italy and Great Britain undertook to co-operate in maintaining the political and territorial status quo in Ethiopia.

Mr. MANDER:: Is not the independence of Abyssinia threatened quite as much as that of Austria, and could not these two documents be suitably discussed together at Rome?

Mr. BALDWIN: I think that my answer holds. I do not think that I can agree with my hon. Friend.

Oral Answers to Questions — ROYAL NAVY.

FLEET AIR ARM (SERGEANT PILOTS).

Commander MARSDEN: 3.
asked the First Lord of the Admiralty how many sergeant pilots of the Royal Air Force are attached to the Fleet Air Arm; and how many petty-officer pilots there are in His Majesty's Navy?

The FIRST LORD of the ADMIRALTY (Sir Bolton Eyres Monsell): There are five sergeant pilots at present attached to the Fleet Air Arm. The constitution of the Fleet Air Arm does not admit of the employment of petty officers or other naval ratings' as pilots.

Commander MARSDEN: May I ask whether this is in accordance with the desires of the Admiralty or in accordance with the orders of the Air Council?

Sir B. EYRES MONSELL: It is in' accordance with the arrangement come to some time ago.

STORES.

Mr. GEORGE HALL: 4.
asked the First Lord of the Admiralty the total amount spent and percentage of money spent in the manufacture, purchase, repair, and alteration of all guns, gun forgings, breech mechanisms, spare parts, aiming rifles, tools, and implements required for the naval service, and for the purchase of all descriptions of projectiles and ammuni-
tion and their components, explosives for torpedoes, mines, etc., with private trade and in Government factories, respectively, each year during the past 10 years?

Navy Estimates: Vote 9.


The amounts spent in each of the years 1925–1934 on the stores indicated for all services.


Year.
Total Expenditure.
Spent in
Percentage of total amount spent in


Government Factories.
Trade.
Government Factories.
Trade.




£
£
£




1925
…
2,171,000
1,116,000
1,055,000
51
49


1926
…
1,923,000
87,000
1,076,000
44
56


1927
…
2,578,000
910,000
1,668,000
35
65


1928
…
2,455,000
1,261,000
1,194,000
51
49


1929
…
2,204,000
1,208,000
996,000
55
45


1930
…
1,871,000
1,098,000
773,000
59
41


1931
…
1,667,000
846,000
821,000
51
49


1232
…
1,467,000
708,000
759,000
48
52


1933
…
1,706,000
791,000
915,000
46
54


1934(Forecast)
…
1,836,000
851,000
985,000
46
54

Mr. GARDNER: 7.
asked the First Lord of the Admiralty the total amount spent, and the percentage of money spent, on the purchase of torpedoes, torpedo stores, mines, paravanes, depth charges, and stores of allied character, also for any such articles required for instructional purposes in the torpedo school, ships, and mining school, from the ordnance factory and from the private trade, respectively, during each of the past 10 years?

Year.
Total Expenditure.
Spent in
Percentage of total amount spent in


Government Factories.
Trade.
Government Factories.
Trade.




£
£
£
Per cent.
Per cent.


1925
…
478,000
367,000
111,000
77
23


1926
…
312,000
277,000
35,000
89
11


1927
…
492,000
456,000
36,000
93
7


1928
…
456,000
428,000
28,000
94
6


1929
…
402,000
360,000
42,000
90
10


1930
…
465,000
404,000
61,000
87
13


1931
…
493,000
437,000
56,000
89
11


1932
…
572,000
468,000
104,000
82
18


1933
…
814,000
542,000
272,000
67
33


1934(Forecast)
…
934,000
607,000
327,000
65
35

NEW CONSTRUCTION

Mr. G. HALL: 5.
asked the First Lord of the Admiralty the percentage of the total amount allotted to new construction spent on dockyard-built

Sir B. EYRES MONSELL: With the hon. Member's permission, I will circulate the reply in the OFFICIAL REPORT.

Following is the reply:

Sir B. EYRES MONSELL: With the hon. Member's permission, I will circulate the reply in the OFFICIAL REPORT.

Following is the reply:

The amounts spent in each of the years 1925–1934 on the stores indicated for all services, including schools, etc., are:

ships and on contract-built ships each year for the past 10 years; the amount spent on contract work in the dockyard built ships, and the amount spent on dockyard work in the contract-built ships

during the same period and in relation to the expenditure on dockyard-built ships; and the percentage relation in each year between the sums spent on contract work and the sums spent on dockyard work?

Expenditure on Contract-built and Dockyard-built Ships.


Year.
Contract-built Ships
Dockyard-built ships.
Grand Total New Construction.
Percentage relation between sums spent on Contract Work and Dockyard Work.


Dock-yard Work
Contract Work.
Total
Dock-yard Work
Contract Work.
Total
Contract Work.
Dock-yard Work



£
£
£
£
£
£
£




1924
456,671*
3,466,952
3,923,623
1,125,175
672,737
1,797,912
5,721,535
—
—


Per cent
8.0
60.6
68.6
19.7
11.7
31.4
—
72.3
27.7


1925
660,817*
3,727,787
4,388,604
1,023,679
1,359,801
2,383,480
6,772,084
—
—


Per cent.
9.8
55.0
64.8
15.1
20.1
35.2
—
75.1
24.9


1926
291,596
3,732,325
4,023,921
1,284,502
2,255,908
3,540,410
7,564,331
—
—


Per cent
3.9
49.3
53.2
17.0
29.8
46.8
—
79.1
20.9


1927
255,050
6,245,806
6,500,856
1,128,665
1,798,523
2,927,188
9,428,044
—
—


Per cent
2.7
66.3
69.0
11.9
19.1
31.0
—
85.4
14.6


1928
343,956
5,813,975
6,157,931
1,150,551
1,567,884
2,718,435
8,876,366
—
—


Per cent.
3.9
65.5
69.4
12.9
17.7
30.6
—
83.2
16.8


1929
303,007
5,242,013
5,545,020
729,993
776,998
1,506,991
7,052,011
—
—


Per cent.
4.3
74.3
78.6
10.4
11
21.4
—
85.3
14.7


1930
137,849
3,397,395
3,535,244
959,671
902,517
1,862,188
5,397,432
—
—


Per cent.
2.6
62.9
65.5
17.8
16.7
34.5
—
79.6
20.4


1931
86,387
2,246,74
2,333,131
1,148,701
1,436,249
2,584,950
4,918,081
—
—


Per cent.
1.7
45.7
47.4
23.4
29.2
52.6
—
74.9
25.1


1932
163,492
2,873,870
3,037,362
1,289,392
1,778,915
3,068,307
6,105,669
—
—


Per cent.
2.7
47.1
49.8
21.1
29.1
50.2
—
76.2
23.8


1933
138,207
5,140,029
5,278,236
1,151,937
1,539,116
2,691,053
7,969,289
—
—


Per cent
1.7
64.5
66.2
14.5
19.3
33.8
—
83.8
16.2


 Note.—The figures for Dockyard work are the direct charges for labour and material; the on costs and services are not included.


 All figures are exclusive of the cost of first outfit and reserves of guns, torpedoes and ammunition


 *The figures for Dockyard work in 1924 and 1925 include expenditure on His Majesty's Ships "Emerald" and "Enterprise" which, though originally ordered by contract, were in fact completed in the Royal Dockyards.

CONSTRUCTION COSTS.

Mr. GARDNER: 8.
asked the First Lord of the Admiralty the total standard tonnage and the cost per standard ton of battleships, aircraft carriers, light cruisers and cruisers, flotilla leaders, destroyers, submarines, and sloops constructed in Government dockyards and by

Sir B. EYRES MONSELL: With the hon. Member's permission, I will circulate the reply in the OFFICIAL REPORT.

Following is the reply:

contract, respectively, during each of the past ten years; and, in the case of Government-built ships, the amount allocated to overhead costs?

Sir B. EYRES MONSELL: With the hon. Member's permission, I will circulate the reply in the OFFICIAL REPORT.

Following is the reply:

Dockyard Built Ships.


Financial Year of Completion.
Light Cruisers and Cruisers.
Flotilla Leaders.
Destroyers.
Submarines.
Sloops.


Total standard tonnage.
Total cost per standard ton.
Overhead cost per standard ton.
Total standard tonnage.
Total cost per standard ton.
Overhead cost per standard ton.
Total standard tonnage
Total cost per standard ton
Overhead cost per standard ton.
Total standard tonnage
Total cost per standard ton
Overhead cost per standard ton.
Total standard tonnage
Total cost per standard ton.
Overhead cost per standard ton.





£
£

£
£

£
£

£
£

£
£


1925
…
9,770
221
32
—
—
—
—
—
—
2,425
429
56
—
—
—


1926
…
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—


1927
…
—
—
—
—
—
—
—
—
—
1,311
464
96
—
—
—


1928
…
48,900
214
23
—
—
—
—
—
—
—
—
—
—
—
—


1929
…
—
—
—
—
—
—
—
—
—
1,475
302
64
—
—
—


1930
…
9,900
204
23
—
—
—
—
—
—
1,475
297
63
2,050
161
28


1931
…
8,390
212
21
—
—
—
—
—
—
1,475
287
58
4,420
158
32


1932
…
7,140
228
28
1,400
216
34
2,750
214
29
1,280
371
93
4,240
152
39


1933
…
14,100
207
27
—
—
—
—
—
—
1,280
362
101
—
—
—


1934
…
—
—
—
1,475
235
32
—
—
—
670
355
112
3,960
162
41

Contract Built Ships.


Financial Year of Completion.
Battleships.
Light Cruisers and Cruisers.
Flotilla Leaders.
Destroyers.
Submarines.
Sloops.


Total standard tonnage.
Cost per standard ton.
Total standard tonnage.
Cost per standard ton.
Total standard tonnage
Cost per standard ton
Total standard tonnage
Cost per standard ton
Total standard tonnage
Cost per standard ton.
Total standard tonnage.
Cost per standard ton






£

£

£

£

£

£


1925
…
…
—
—
15,130
222
1,480
277
—
—
760
378
—
—


1926
…
…
—
—
—
—
—
—
—
—
760
390
—
—


1927
…
…
67,400
176
19,500
200
—
—
2,520
259
2,703
244
—
—


1928
…
…
—
—
9,730
203
—
—
—
—
1,475
231
2,090
106


1929
…
…
—
—
9,730
199
—
—
6,750
200
2,950
231
—
—


1930
…
…
—
—
18,100
208
2,900
207
8,140
198
14,750
217
2,090
115


1931
…
…
—
—
—
—
—
—
6,790
201
—
—
—
—


1932
…
…
—
—
—
—
1,390
205
13,750
201
3,305
241
—
—


1933
…
…
—
—
7,030
213
—
—
—
—
—
—
—
—


1934
…
…
—
—
7,000(a)
204(a)
—
—
13,750(b)
213
5,040(c)
298
3,260
131


(a) This ship (His Majesty's Ship "Ajax") completed on 12th April, 1935.


(b) Includes one destroyer whose completion was delayed beyond 31st March, 1935.


(c) Includes one submarine whose completion was delayed beyond 31st March, 1935


Note. — The figures in the above tables are exclusive of the cost of first outfit and reserves of guns, torpedoes and ammunition. No aircraft carriers have been built as such during the last 10 years and no battleships have been built in His Majesty's Dockyards during this period.

STRUCTURAL STORES.

Mr. GARDNER: 6.
asked the First Lord of the Admiralty the amount spent on structural stores required in connection with the building and repair of ships in His Majesty's dockyards each year during the past 10 years; whether tenders were obtained for the supply of such material; what Admiralty department was responsible for examining and reporting on such tenders; and whether the lowest tenders were accepted?

The FINANCIAL SECRETARY to the ADMIRALTY (Lord Stanley): As the reply to the first part of the question is in tabular form, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT. The answer to the remainder of the question is as follows:—Tenders were obtained. The responsibility for examining and reporting on such tenders rested with the Director of Navy Contracts in consultation where necessary with the technical department concerned, namely, the Directorate of Naval Construction. The lowest tenders meeting all requirements in regard to quality and delivery were accepted.
Following is the reply to the first part of the question:
Amount estimated to have been spent on structural stores required in connection with the building and repair of ships in His Majesty's dockyards.

Years.



Amount.






£


1924
…
…
…
322,000


1925
…
…
…
543,000


1926
…
…
…
538,000


1927
…
…
…
355,000


1928
…
…
…
405,000


1929
…
…
…
371,000


1930
…
…
…
329,000


1931
…
…
…
431,000


1932
…
…
…
292,000


1933
…
…
…
345,000

NORTHERN RHODESIA (AGRICULTURAL ADVISORY BOARD)

Mr. PARKINSON: 10.
asked the Secretary of State for the Colonies whether he can give any information as to the position and function of the agricultural advisory board which is to be set up in Northern Rhodesia; and what will be the representation of native interests on the board?

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): As the answer is a rather long one, with the hon. Member's permission I will circulate it in the OFFICIAL REPORT.
Following is the answer:
The Agricultural Advisory Board has been established to advise the Government on matters of agricultural production and its relation to local consumption and export. Any question connected with agricultural production will be submitted to Government through the Board, so that the Government can be assured that it has been thoroughly discussed by all interests concerned, and that any recommendation made is, in the opinion of the Board, in the general interests of the territory. The personnel of the Board, which has been chosen with a view to securing co-operation between producers, middlemen and consumers, is as follows: —The Treasurer; Chairman; the Directors of Animal Health and Agriculture and the Secretary for Native Affairs, ex officio members; five representatives of farmers and co-operative societies; two representatives for mining companies; two representatives of contractors to mining companies; one elected member of the Legislative Council, representing consumers and a member to represent the railway. When the functions of the Secretary for Native Affairs become vested in the Senior Provincial Commissioner, that officer will become an ex officio member of the Board. The official members of the Board will be charged with the representation of native interests.

KENYA (HUT AND POLL TAXES).

Mr. BANFIELD: 11.
asked the Secretary of State for the Colonies whether any steps were taken by the Government of Kenya Colony to carry out the recommendations made by Canon Burns, the representative of the native community in the Kenya Legislative Council, that, on account of the natives' overburdened and poverty-stricken condition, a reduction of the hut and poll taxes by 2s. should be made?

Sir P. CUNLIFFE-LISTER: Any general reduction in the rates of native taxation would necessitate a corresponding reduction in the services rendered by Government to the natives, and is on that ground to be deprecated. The
Governor assures me that the position in each native reserve is being carefully watched, and, if he is satisfied that a definite hardship exists in any particular area, the rate in that area will be reduced.

Mr. BANFIELD: Is the right hon. Gentleman not aware of the overburdened and poverty-stricken condition of the natives?

Sir P. CUNLIFFE-LISTER: No If the hon. member were to visit Kenya he would see that the conditions vary a great deal as between one reserve and another

Oral Answers to Questions — TRADE AND COMMERCE.

PALESTINE.

Captain STRICKLAND: 12 and 14.
asked the Secretary of State for the Colonies (1) what arrangements are being made to further the interests of Palestine trade in connection with the present discussions proceeding with the Egyptian delegation at present in this country;
(2) whether, in connection with the present discussions which are proceeding with regard to the commercial relations between Great Britain and Egypt, he can make an assurance that full consideration will be given to the possibility of increasing in Egypt the market for exports from Palestine?

Sir P. CUNLIFFE-LISTER: My right hon. Friend the President of the Board of Trade and I are keeping in mind during the discussions with the Egyptian Trade Delegation the possibility of promoting the trade of Palestine as well as other parts of the Colonial Empire with Egypt. I have also recently approved a proposal by the High Commissioner for Palestine that a trade delegation from Palestine should visit Egypt, and it is hoped that direct negotiations between the two countries will be commenced in the near future.

Captain STRICKLAND: 13.
asked the Secretary of State for the Colonies in respect of which commercial treaties negotiated within the past three years consideration has been given to the question of the finding of increased markets for Palestine products; and in which treaties arrangements for this purpose have actually been made?

Sir P. CUNLIFFE-LISTER: In all negotiations for commercial agreements concluded within the last three years the interests of Palestine have been borne in mind and Palestinian products have received specific concessions under the agreements with Latvia, Lithuania, Estonia, and Poland.

DOMINIONS (ADVERTISING MATTER)

Mr. ROBINSON: 38.
asked the Secretary of State for Dominion Affairs whether he can state the circumstances in which advertising matter descriptive of United Kingdom manufactures is admitted free into Australia, New Zealand, the Union of South Africa, and the Irish Free State?

The SECRETARY of STATE for DOMINION AFFAIRS (Mr. J. H. Thomas): As the answer to this question is somewhat long I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
Following is the answer:
Advertising matter descriptive of United Kingdom manufactures is accorded free entry in the Commonwealth of Australia, New Zealand, the Union of South Africa and the Irish Free State in the following circumstances:
Australia.—Single copies of catalogues and price lists addressed to merchants.
New Zealand.—Price lists, etc., of firms not having an established place of business in New Zealand.
Union of South Africa.—Price lists, etc., of firms having no established place of business in the Union, and no permanent agent holding stocks there.
Irish Free State.—Price lists, etc., sent otherwise than in bulk.

Oral Answers to Questions — AVIATION.

IMPERIAL AIR SERVICES (PARIS-BRINDISI TRAIN JOURNEY).

Mr. LYONS: 15.
asked the Under-Secretary of State for Air whether, and from what date, the train journey Paris-Brindisi is to be entirely eliminated from the Empire air services of Imperial Airways?

The UNDER-SECRETARY of STATE for AIR (Sir Philip Sassoon): Entire elimination of the Paris-Brindisi train
journey is intended eventually, but I am not in a position to give a definite date. A service which will carry part of the Empire mail by air, to fly twice a week each way between London and Brindisi, is due to come into operation on the 28th of this month.

NIGHT FLYING (AERODROMES).

Mr. LYONS: 16.
asked the Under-Secretary of State for Air whether he will specify the aerodromes in this country, municipal and otherwise, that are equipped for night flying?

Sir P. SASSOON: The aerodromes at Croydon, Lympne and Heston are fully equipped for night flying. In addition certain other civil aerodromes have limited night flying equipment for use in emergency.

Mr. LYONS: May I ask whether the new aerodrome for the city of Leicester which is to be opened during the summer will be so fully equipped?

Sir P. SASSOON: Not yet.

MUNICIPAL AERODROMES.

Mr. LYONS: 17.
asked the Under-Secretary of State for Air whether he will specify the municipal aerodromes now established in this country or which are expected to be opened this year?

Sir P. SASSOON: As the reply involves lists of names, I will, with my hon. and learned Friend's permission, circulate it in the OFFICIAL REPORT.
Following is the reply:
The municipal aerodromes now established are Blackpool, Bristol, Cardiff, Carlisle, Doncaster, Hull, Inverness, Ipswich, Leeds-Bradford, Leicester, Liverpool, Manchester, Norwich, Nottingham, Plymouth, Portsmouth, Renfrew, Rochester, Scarborough (private use), Southampton, Stoke-on-Trent and Walsall. Municipal aerodromes that may be opened this year are Brighton-Hove-Worthing, Cheltenham - Gloucester, Grimsby, Newcastle-upon-Tyne and Southend.

FREIGHT CONTRACT (BUSREH AND DHIBBAN).

Lieut.-Colonel APPLIN: 18.
asked the Under-Secretary of State for Air whether he is aware that the Air Ministry, having entered into a contract for the carriage
of material between Busreh and Dhibban, now decline to carry out Clause 3 thereof which lays down the terms of payment of freight; and what are the grounds for this breach of contract entailing financial hardship on the carriers who are carrying out their part of the contract?

Sir P. SASSOON: I can assure the hon. and gallant Member that there has been no breach of the contract by the Air Ministry. The second part of the question does not therefore arise.

PRIVATE AEROPLANES (AIRWORTHINESS).

Captain GUEST: 20.
asked the Under-Secretary of State for Air whether, in view of the acceptance by the Air Ministry of the recommendation of the Gorell Committee in relation to the need for an annual certificate of airworthiness for privately-owned aeroplanes, he is aware that private owners are being forced, under Air Ministry Form C.A. (79), to renew these certificates at considerable expense; whether it is intended to introduce legislation to implement this recommendation of the Gorell Committee; and when will it be introduced?

Sir P. SASSOON: My right hon. and gallant Friend will recollect that this recommendation was dependent on the introduction of compulsory third-party insurance. As I have already stated in the House, the steps to be taken for carrying out this and other major recommendations of the Gorell Committee are under close discussion with the outside interests concerned. The discussions are progressing as well as the complexity of the subject will admit, but the introduction of legislation must be dependent on the exigencies of Parliamentary time.

Captain HAROLD BALFOUR: Can the Under-Secretary give an assurance that the Ministry have not in any way altered their attitude as regards accepting the recommendation of the Gorell Committee?

Sir P. SASSOON: Not at all

NIGHT SERVICES (GERMAN PILOTS).

Captain GUEST: 21.
asked the Under-Secretary of State for Air whether he has any record of the names of German pilots flying to Croydon by German night air-services; and whether he can state the number of individual pilots who have so visited England in the last six months?

Sir P. SASSOON: The names of all pilots arriving at Croydon from abroad are recorded as a matter of routine. I have ascertained that seven German pilots have flown to England on night air-services during the last six months.

Oral Answers to Questions — TRANSPORT.

BUILT-UP AREAS (SPEED LIMIT).

Major DESPENCER-ROBERTSON: 22.
asked the Minister of Transport whether he will consult the appropriate local authority with a view to the abolition of the 30-mile-per-hour speed limit on the main road between Camberley and the Portsmouth road, since there would appear to be no reason for the limit on that stretch of road?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Captain Austin Hudson): It has not been possible to identify the road to which my hon. and gallant Friend refers, but, if he will furnish more definite particulars the matter shall be looked into immediately

PROPOSED THAMES WATER OMNIBUS SERVICE

Mr. MANDER: 24.
asked the Minister of Transport whether he is prepared to consider the possibility of co-operating with the London County Council in connection with some form of guarantee for the proposed Thames water omnibus service contemplated by the Thames Passenger Service, Limited?

Captain HUDSON: No such proposal has been made to my hon. Friend, and in Any event he would not feel justified in recommending that funds derived from general taxation should be used for this purpose.

Mr. MANDER: Are we to understand that the Minister of Transport will not even discuss the matter?

Captain HUDSON: My hon. Friend is prepared to discuss the matter. A subcommittee which was set up in November, 1934, reported very adversely against the proposal.

ROAD SIGN, LACOCK.

Captain CAZALET: 26.
asked the Minister of Transport whether his attention has been called to the erection of a major road ahead sign in Lacock
village, Wilts, and to the protests both of the local inhabitants and the Council for the Preservation of Rural England us to its position; and whether, in view of the fact that it is not required by motorists and constitutes a danger to pedestrians after dark, he will reconsider his decision as to its necessity?

Captain HUDSON: My hon. Friend has asked for a report on this matter and will communicate further with my hon. and gallant Friend.

PORTABLE SIGN BOARDS.

Mr. DAVID EVANS (for Mr. ALED ROBERTS): 25.
asked the Minister of Transport whether he is aware that certain highway authorities have provided portable sign boards for use on roads bearing the inscription" Stop—Road Traffic Officer"; and whether, inasmuch as the driver of a motor vehicle is not obliged to stop at the request of any officer except a police constable in uniform, he will cause the use of such notices to be discontinued?

Captain HUDSONM: In the absence of some means of stopping vehicles, the powers of highway authorities under Section 27 of the Road Traffic Act, 1930, to weigh vehicles, could not be effectively carried out. My hon. Friend has, therefore, under the powers conferred by Section 48 of the Act, authorised the use of signs of this type. These signs may be used only by persons duly authorised under the Act to discharge the duty of weighing vehicles. Directions issued provide that the signs are not to be used during the hours of darkness.

Captain STRICKLAND: Would the hon. and gallant Gentleman inform the House how a motorist is to know whether or not a person is authorised to use the sign?

Captain HUDSON: The sign cannot be mistaken. It bears the words "Stop. Road Traffic Officer" Unless an officer has power to stop a vehicle, he cannot weigh it. Parliament has decided that it should be weighed, and I do not see what else can be done.

Mr. HERBERT WILLIAMS: Under what section of the Road Traffic Act is sanction given to persons other than police and ambulance and fire brigade men to exceed the speed limit?

MOTOR DRIVERS' HOURS.

Mr. McKEAG: 28.
asked the Minister of Transport whether he is aware that an order under Section 19 of the Road Traffic Act, 1930, varying the hours of motor vehicle drivers, was in operation from 1st April, 1931, to 31st March, 1933, and that a similar order was made in November, 1934, with respect to the drivers of vehicles worked under A and B under the Road and Rail Traffic Act, 1933, but an application for a similar order has been refused in respect of vehicles operated under a C licence; and whether the refusal of the application was due to any change in the working conditions of drivers or to any evidence that the order of 1931 had been detrimental to the public safety?

Captain HUDSON: I would refer to the reply which my hon. Friend gave to a question by the hon. Member for South Bradford (Mr. Holdsworth) on 10th April, of which I am sending a copy.

ELECTRICITY CHARGES.

Captain CAZALET: 27.
asked the Minister of Transport whether his attention has been drawn to the disparity in the prices charged for electricity in different parts of England; whether he will consider appointing a departmental committee to report upon the causes of these variations; and what steps it is advisable to take to bring about a greater degree of uniformity in the prices?

Captain HUDSON: The disparity in prices charged for electricity by the numerous undertakings in different parts of the country is due to a variety of causes which are sufficiently known and it does not appear that further general inquiry is necessary to ascertain them. While there is no doubt room for greater uniformity, my hon. Friend is informed that as a result of the coming into operation of the Grid tariffs there is a. growing tendency for bulk supply charges to become more uniform, and consequently for the distributors to adopt more uniform methods of charge in dealing with consumers. The Electricity Commissioners also state that they take all possible opportunities of impressing upon the industry the need for securing greater uniformity in methods of charge. I may add that in any particular case where local authorities are satisfied that the maxi-
mum prices charged in their district are excessive, it is open to them to apply to my hon. Friend to require such charges to be reduced.

Captain CAZALET: Is my hon. and gallant Friend satisfied that either the Commissioners or the Minister has power to tell the distributing companies to reduce their prices if he thinks it is necessary to do so?

Captain HUDSON: I think that the last paragraph of my answer covers that point.

Mr. WEST: Is it not a fact that the lowest prices now charged are those charged by municipalities, and is not the obvious remedy more public ownership?

Captain HUDSON: I require notice of that question.

ANCIENT MONUMENTS (CEFN BRITH, BRECONSHIRE).

Mr. RHYS DAVIES: 29.
asked the First Commissioner of Works whether he will consider scheduling and taking over as an ancient monument the cottage, Cefn Brith, Breconshire, where John Penry, the martyr, was born?

The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore): I understand that this farmhouse is still inhabited. It cannot, therefore, be scheduled or accepted for guardianship by the Commissioners of Works under the provisions of the Ancient Monuments Acts.

Mr. DAVIES: Will the right hon. Gentleman be good enough to keep an eye on this property for the purpose of future consideration?

Mr. ORMSBY-GORE: Any house that is inhabited is expressly ruled out from the Ancient Monuments Act.

HIS MAJESTY'S SILVER JUBILEE (CELEBRATIONS).

Mr. GODFREY NICHOLSON: 30.
asked the First Commissioner of Works how many Members of each House of Parliament have intimated their intention of being present at the ceremony in Westminster Hall on 9th May; and whether he can now say how much accommodation will be available for the wives of Members?

Mr. ORMSBY-GORE: 464 Members of the other House and 455 Members of this House have intimated their intention of being present on the 9th May; accordingly accommodation will be available for ballot for 180 wives, or other nearest female relatives, of Members of this House, in addition to 46 wives or relatives of Ministers, or ex-Cabinet Ministers who are Members of this House, and are being invited without recourse to the ballot.

Mr. G. NICHOLSON: 31.
asked the First Commissioner of Works what arrangements are being made for parking Members' motor cars on the occasion of the presentation of addresses to His Majesty in Westminster Hall on 4th May?

Mr. ORMSBY-GORE: Owing to the fact that His Majesty will leave, after proceeding through the Hall, from the north door, it will not be possible for Members to park their cars in New Palace Yard, but I hope to arrange with the Commissioner of Police for parking places to be available in the vicinity. A parking label will be issued to every Member who has signed the book notifying his intention of being present in Westminster Hall. It will also be necessary to restrict the access of cars to New Palace Yard from 10.45 a.m. until after His Majesty's departure. It will greatly assist the traffic authorities if as many Members as possible will reach the House by Westminster underground station and the subway.

Captain BALFOUR: 32.
asked the First Commissioner of Works whether the National Anthem will be played by a military band or reproduced from a gramophone record on the occasion of the royal visit to Westminster Hall on 9th May?

Mr. ORMSBY-GORE: The National Anthem will be played by a, military band.

Mr. THORNE: Does the right hon. Gentleman think there will be any objection to the singing of the Socialist song "England Arise"?

Captain BALFOUR: 39.
asked the Financial Secretary to the War Office whether the War Office could, upon
request made by the appropriate department, provide a military band to play the National Anthem on the occasion of the royal visit to Westminster Hall on 9th May?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Douglas Hacking): Yes, Sir

Captain BALFOUR: Can my right hon. Friend say what regimental band will perform on this occasion?

Mr. HACKING: No, Sir; not yet.

Oral Answers to Questions — BROADCASTING.

RUSSIA (COMMUNIST PROPAGANDA).

Lieut.-Colonel TODD: 33.
asked the Postmaster-General whether, in view of the objectionable character of the Communist propaganda which is broadcast in English from the Moscow wireless station on long and short wave-lengths on four nights a week, he will take steps to ensure that these broadcasts are jammed and rendered incapable of reception in this country?

The POSTMASTER-GENERAL (Sir Kingsley Wood): No, Sir. His Majesty's Government would be reluctant to have recourse to the jamming of wireless messages from any foreign country except in cases of grave national emergency. Should my attention be called to broadcasts from Moscow of an objectionable character I should be glad to consider, in consultation with my right hon. Friends the Secretaries of State for Foreign Affairs arid for the Home Department, what action could appropriately be taken.

Mr. WEST: Is the Minister aware that the Communist propaganda broadcast from Moscow is not more objectionable and is certainly less audible than the Nazi propaganda from Germany?

Sir K. WOOD: I am not in a position to make these comparisons. I have not the time that the hon. Gentleman evidently has.

Mr. MAXTON: Is the Postmaster-General aware that these particular broadcasts are more profitable to a large proportion of British workers than his own programmes?

Sir K. WOOD: I should say to a large proportion of the hon. Gentleman's party.

Mr. MAXTON: That is the same thing.

Lieut.-Colonel TODD: Is my right hon. Friend aware that the broadcast during the Lord Privy Seal's visit was one of the most malicious in recent times?

Lieut.-Colonel TODD: 1.
asked the Secretary of State for Foreign Affairs whether the question of political propaganda within the British Empire was discussed during the recent conversations in Moscow between the representative of His Majesty's Government and any representatives of the Government of the Union of Soviet Socialist Republics; and, if so, whether any understanding was arrived at and of what nature?

Mr. BALDWIN: I would refer my hon. and gallant Friend to the penultimate paragraph of the communique issued in Moscow on the 31st March on the conclusion of my right hon. Friend's visit. That paragraph read as follows:
They are confident that both countries, recognising that the integrity and prosperity of each is to the advantage of the other, will govern their mutual relations in that spirit of collaboration and loyalty to obligations assumed by them, which is inherent in their common membership of the League of Nations
I regret that I can add nothing to the terms of that communique.

Lieut.-Colonel TODD: Is my right hon. Friend aware that since that conversation in Moscow the broadcast propaganda has been more virulent than ever?

COMMITTEE. OF INQUIRY.

Mr. ATTLEE: 35.
asked the Postmaster-General whether he is yet in a position to make any statement on the subject of the setting up of a committee to consider the future of broadcasting after the expiration of the present charter?

Sir K. WOOD: I have set up a Committee with the following terms of reference:
To consider the constitution, control and finance of the Broadcasting Service in this country and advise generally on the conditions under which the service, including broadcasting to the Empire, television broadcasting and the system of wireless exchanges, should be conducted after the 31st December, 1936

The Committee will be constituted as follows:

The Rt. Hon. Viscount Ullswater, G. C. B. (Chairman).
The hon. Member for Dover (Major the Hon. J. J. Astor).
The hon. Member for Limehouse (Mr. C. R. Attlee).
The hon. Member for Montgomery (Mr. E. C. Davies, K. C.)
Lord Elton.
Sir William McLintock, Bt., G.B.E., C.V.O.
The Marchioness of Reading.
The Rt. Hon. Lord Selsdon, K.B.E.
The hon. Member for East Birkenhead (Mr. H. Graham White).
The Secretary of the Committee will be:—
Mr. H. G. G. Welch of the General Post Office.

BASUTOLAND (AFFORESTATION).

Mr. PARKINSON: 36.
asked the Secretary of State for Dominion Affairs whether any steps are being taken to promote afforestation in Basutoland?

Mr. J. H. THOMAS: The question of an extension of tree planting in Basutoland is at present under the consideration of the local Government in connection with the recommendations of the Commission referred to in the reply to a question by the hon. Member yesterday.

MANDATED TERRITORIES (GERMANY).

Mr. MANDER: 37.
asked the Secretary of State for Dominion Affairs whether he is able to give an assurance that Dominion Governments are as resolutely opposed as the British Government to the return, under any circumstances, to Germany of territories now under mandate?

Mr. J. H. THOMAS: The question of policy involved is one for His Majesty's Governments in each of the Dominions concerned, and I am not in a position to make any statement as to their views.

HOUSING (FINANCIAL PROVISIONS) ACT.

Mrs. WARD: 40.
asked the Minister of Health whether his attention has been called to the decision of the principal
London building societies to reduce their rate of interest to purchasers for their own occupation to½ per cent.; and whether his Department have formed any estimate of the effect, if any, this decision will have upon advances made by a building society under Section 2 of the Housing (Financial Provisions) Act, 1933?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): Yes, Sir. In accordance with the agreement made between representatives of the building societies and my right hon. Friend, the rate of interest on advances made under the Act my hon. Friend mentions should in the area covered be in future no more than 4 per cent. and may be 3½ per cent.

ALDERSHOT (FUMIGATION DEATHS).

Mr. THORNE: 41.
asked the Minister of Health whether he has received a report from the coroner in connection with the death of two children who died after the fumigation of their home at Aldershot; whether he can state the cause of death; and whether the houses were properly examined before the occupants were allowed to take possession after fumigation?

Mr. SHAKESPEARE: It is not the duty of the coroner to submit reports on these matters to the Minister of Health, but my right hon. Friend has received a preliminary report from an officer of his Department who was present at the inquest to which he is giving immediate consideration in consultation with the Home Office. The verdict was one of death from misadventure, namely, by cyanide poisoning. As regards the last part of the question, I am sending the hon. Member a copy of the rider attached by the jury to the verdict.

Mr. THORNE: As soon as the Minister receives the report of the jury's decision will he give it due consideration; secondly, does he not think that this kind of work should be done without the intervention of a contractor; and, thirdly, will the local authority pay compensation to the parents for the expenses of the funeral?

Mr. SHAKESPEARE: In reply to the first question, we shall give the report very careful consideration, because this is a very serious matter. On the other points I would rather not express an opinion, because other action may be taken.

Mr. THORNE: What about compensation?

Mr. SHAKESPEARE: On the question of compensation, I would not express an opinion, but action may be taken.

FOREIGN SEAMEN (REPATRIATION).

Major HILLS: 42.
asked the President of the Board of Trade in what respects British law and practice differs from the provisions of the International Maritime Convention of 1926, concerning the repatriation of seamen?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): It is not possible to deal with this matter within the limits of a Parliamentary answer, but I will send my right hon. and gallant Friend a statement on the subject.

Oral Answers to Questions — COAL INDUSTRY

WIGAN COAL COMPANY (DISPUTE).

Mr. ROBINSON: 43.
asked the Secretary for Mines whether he is aware of the threatened stoppage of men employed by the Wigan Coal Company; and what steps have been taken to prevent it?

The SECRETARY for MINES (Mr. Ernest Brown): I have seen a reference to this case in the Press and I am having further inquiry made. I will communicate the results to my hon. Friend as soon as possible

Mr. ROBINSON: Will the Government take every step to avoid a disastrous stoppage which may involve the livelihood of 10,000 men in Lancashire

Mr. BROWN: It is much too early to know whether my Department can render any assistance.

Mr. GORDON MACDONALD: Will the Secretary for Mines bear in mind the fact that this dispute is not only a wages question, but also a question of the
tyrannical and objectionable methods adopted by the coalowners, and will he inquire from the Miners' Federation as well as from the coalowners?

Mr. BROWN: I shall ascertain all the facts relevant to the question put.

GRESFORD COLLIERY, WREXHAM

Mr. TINKER: 44.
asked the Secretary for Mines if he is in a position to make a statement on the investigations now being made at Gresford Colliery, and if the officials of the North Wales miners or the officials of the Miners' Federation have been invited to be present when the reports of the examinations below ground have been made?

Mr. E. BROWN: The operations have not reached the stage at which investigations can be made, and they are still directed to the building and tightening of a system of stoppings close to the shafts. The participation of the workmen's representatives was invited at the outset when the plans for the work were being prepared, and since the work was started they have had and continue to have full facilities to be at the colliery and to discuss developments.

Mr. TINKER: Before any decision is arrived at regarding this mine, will the hon. Gentleman call in the representatives of the Miners' Federation, as the prevailing opinion appears to be that the mine might be closed without their sanction, and they want to know before anything is done?

Mr. BROWN: I do not know how that opinion has arisen. The co-operation of the officials of the federation has been welcomed from the beginning and will continue tó be welcomed.

JUBILEE PENSION SCHEME, SOUTH WALES.

Mr. G. HALL: 45.
asked the Prime Minister whether, in view of the promise of substantial sums of money by the representatives of the South Wales coal-owners and the South Wales Miners' Federation to establish a pension scheme for the miners in South Wales, the Government will co-operate with this effort by giving financial assistance and, if desired, in the negotiating of the details of the scheme

The PRIME MINISTER (Mr. Ramsay MacDonald): I understand that the parties concerned have not yet had time to consider even the preliminary problems inherent in the proposed scheme, and until the scheme has taken shape to some extent it is not possible to say in what directions, if any, the Government may be best able to assist in its development., but I hope very much that South Wales will not be the only district to adopt this admirable idea. I fear, however, that I can hold out no hope of Government financial assistance.

GERMANY (DISARMAMENT)

Mr. MALLALIEU: 46.
asked the Prime Minister whether any statement has been made on behalf of the German Government to the effect that it would be prepared to disarm to any degree upon which international agreement can be obtained; and, if not, to what extent has the German Government declared itself willing to go towards disarmament in concert with the other Powers?

The PRIME MINISTER: The latest statement made by the German Government on this subject is that reported to the House by my right hon. Friend the Secretary of State for Foreign Affairs on 9th April, and I would refer the hon. Member to columns 985 and 986 in the OFFICIAL REPORT

Mr. MALLALIEU: May not the House have some further elucidation of that part of the statement referred to by the right hon. Gentleman in his reply, which is to the effect that if other countries abandoned certain types Germany would do the same?

The PRIME MINISTER: The hon. Member might address that question to my right hon. Friend who made the statement.

Oral Answers to Questions — SCOTLAND

MILK MARKETING SCHEME.

Mr. SCRYMGEOUR - WEDDER -BURN: 47.
asked the Secretary of State for Scotland whether the Re-organisation Commission for Milk proposes to submit an interim Report on the working of the Scottish Milk Marketing Scheme?

The SECRETARY of STATE for SCOTLAND (Sir Godfrey Collins): I understand that the difficulties which have arisen in Scotland are regarded by the Commission to be such as are inherent in all pooling schemes, and similar differences of interest in connection with the English Milk Marketing Scheme will no doubt later be made the subject of representations to the Commission by parties who consider themselves to have been unduly prejudiced as a result of that Scheme. The Commission feel that if any temporary change, in supplement of the alterations already made in the Scottish Milk Marketing Scheme during the present calendar year, could be suggested, such change might, be found later to be at variance with the general recommendations that the Commission may put forward in the light of more complete knowledge of the situation. The Commission consider that no Interim Report should be made at this stage, but that, having informed themselves of the nature of the Scottish difficulties at meetings in Edinburgh with representatives of the milk industry they should bear these matters prominently in mind.

Mr. LAMBERT: When does the right hon. Gentleman expect the final report of this Re-organisation Commission?

Sir G. COLLINS: I am afraid I am unable to answer that question.

NEW INDUSTRIES.

Mr. KENNETH LINDSAY: 48.
asked the Secretary of State for Scotland how many new factories have been started in Scotland during the last two years; and whether he will consider, in conjunction with the special commissioner, taking practical steps to attract new industries to specially selected sites?

Sir G. COLLINS: The number of new factories designed to afford employment to 25 or more workpeople which were opened in Scotland in 1932 was 20 and in 1933, 14. The numbers for 1934 are riot yet available. As regards the second part of the question His Majesty's Government are always ready to consider sympathetically any proposals relating to new industries that the Commissioners for the Special Areas may put forward. Among the practical steps already taken grants amounting to £23,300 have been made to the Scottish National Development Council from the Special Areas
Fund in aid of schemes of industrial publicity and research on behalf of the Special Areas in Scotland.

Mr. RHYS DAVIES: Can the right hon. Gentleman give us the figures showing the other side of the picture and tell us how many factories have been closed in the same period?

Sir G. COLLINS: I should require notice of that question.

HOUSING (STEWARTON)

Mr. LEONARD: 49.
asked the Secretary of State for Scotland whether he is aware that a single apartment attic at 22, Rigg Street, Stewarton, is occupied by a family of eight units: that it has been condemned by the medical officer of health since September, 1933; and, as this family cannot be rehoused until a clearance order has been confirmed by his Department, what action he proposes to take?

Sir G. COLLINS: I am aware of the facts stated in the first and second parts of the question. As regards the last part, the Clearance Order in question relates to a single building comprising four houses and as the competency of making an Order in such circumstances is at present the subject of an appeal to the Court of Session in another case, consideration of the matter has had to be deferred pending the result of the appeal. I am, however, instituting inquiries as to whether, in the meantime, arrangements cannot be made for the immediate re-housing of the family concerned.

EDUCATION: NECESSITOUS CHILDREN (FOOTWEAR)

Mr. THORNE: 52.
asked the Parliamentary Secretary to the Board of Education what requests he has received from local education authorities and from the Association of Education Committees during 1934 to the nearest available date for the power to provide boots and shoes for necessitous school children from educational funds; whether it is the intention of the Government during the present Parliament to introduce legislation to give power to the local authorities to provide proper footwear to necessitous school children; and, if not, whether local education authorities will be surcharged if they provide necessitous school children with proper footwear?

The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Ramsbotham): Since December, 1933, the Board have received requests from three local education authorities and from the Association of Education Committees that powers should be given to provide boots and shoes for necessitous children from educational funds. It is not proposed to introduce legislation such 'as the hon. Member suggests.
The question whether a local education authority will be surcharged if they provide footwear is one for the decision of the district auditor.

Mr. THORNE: If the hon. Gentleman has not visited some of the poor schools in certain parts of the country, will he do so and see for himself the deplorable condition in which some of the children are, owing to bad footwear? Perhaps when he has done so, he will reconsider his decision.

Mr. RAMSBOTHAM: That is a matter for the authorities who are charged with the relief of necessity, and is not a matter for the Board.

Mr. PALING: Is it not the case that the health of the children suffers as a result of defective footwear, and that absenteeism among children is much higher than it would be if boots and shoes were provided; and, in view of these facts and the constant requests of local authorities for power in this matter, cannot the Board take up the question and give these authorities the necessary powers?

Mr. RAMSBOTHAM: As I have said, this is a question of the relief of necessity and is not a matter for my Department.

Mr. PALING: But in view of the special character of this question, is it not time that the Board intervened in order to get something done?

Oral Answers to Questions — UNEMPLOYMENT

MINERS

Mr. K. LINDSAY: 54.
asked the Minister of Labour what are the numbers of miners aged 55 to 64 who are unemployed?

The MINISTER of LABOUR (Mr. Oliver Stanley): I regret that this information is not available.

SPECIAL AREAS.

Mr. K. LINDSAY: 55.
asked the Minister of Labour what are the total numbers of unemployed persons over the age of 55 in the areas designated as special?

Mr. STANLEY: The current statistics are not compiled on a basis which would enable me to give the desired information, but some particulars as to the ages of the unemployed in these areas in April, May and June, 1934, were given on pages 59, 118, 147 and 217 of the Report (Cmd. 4728) of Investigations into the Industrial Conditions in certain Depressed Areas.

Oral Answers to Questions — INDIA

BANGALORE.

Mr. ANNESLEY SOMERVILLE (for Duchess of ATHOLL): 50.
asked the Secretary of State for India whether the negotiations are still continuing in regard to the cession of the civil station of Bangalore to Mysore; and whether he will give an undertaking that any agreement arrived at in this matter shall be subject to the approval of Parliament?

The UNDER-SECRETARY of STATE for INDIA (Mr. Butler): The question of the partial retrocession of the Bangalore Assigned Tract is still engaging the attention of the authorities in India. My right hon. Friend will, of cource, be ready to furnish the House with full information regarding whatever arrangements are eventually made in this matter.

STATES (CONSTITUTIONAL QUESTIONS)

Duchess of ATHOLL: 51.
asked the Secretary of State for India whether he is aware that an experienced officer of the Indian Civil Service has gone out to India to conduct independent negotiations with various Princes; and whether he will state the object of these negotiations?

Mr. BUTLER: My Noble Friend is presumably referring to the fact that an Indian Civil Service officer of the Political Department lately on leave has been appointed to the charge of a special branch of the Government of India secretariat which will deal with constitutional questions relating to the Indian States, including questions relating to the execution of the States' Instruments of Accession.

TILBURY FORT.

Mr. THORNE: 53.
asked the Minister of Agriculture the present position with regard to the proposal for selling to the Tilbury local authority Tilbury Fort, on the River Thames; and the price they are asking for the fort; or, alternatively, for what purpose is the fort being used?

The MINISTER of AGRICULTURE (Mr. Elliot): I must apologise to the hon. Member and to the House for not being in my place when this question was asked on the first round. Since 1931, when the property was transferred by the War Department to the Commissioners of Crown Lands, the fort itself has been unoccupied and no use has been found for it, but there is a considerable area of grazing land surrounding the fort which is let on annual tenancy. The Tilbury Urban District Council has been invited by the Commissioners on a number of occasions to acquire the fort property, and the Essex County Council has also been approached, but so far as the Commissioners are aware no definite decision to proceed with the proposal has been arrived at by the local authorities. The price to be paid would be a matter for settlement between the Crown surveyors and the valuer instructed to act on behalf of the local authorities.

Mr. THORNE: If a reasonable offer is made for the land, will the Minister of Agriculture favourably consider the matter?

Mr. ELLIOT: Certainly.

LOCAL GOVERNMENT, TYNESIDE AND MERTHYR TYDVIL (ROYAL COMMISSIONS).

Mr. LANSBURY: (by Private Notice) asked the Prime Minister whether he is now in a position to announce the names of the Commissioners appointed to inquire into the arrangements for local government on Tyneside and in the county borough of Merthyr Tydvil, and the precise terms of reference?

The PRIME MINISTER: Yes, Sir. The King has been pleased to approve the setting up of Royal Commissions to undertake both these inquiries.
The terms of reference for the Tyneside inquiry are:
To examine the system of local government in the areas of local government
north and south of the River Tyne from the sea to the boundary of the rural districts of Castle Ward and Hexham in the county of Northumberland and to the Western boundary of the county of Durham, to consider what changes, if any, should be made in the existing arrangements with a view to securing greater economy and efficiency, and to make recommendations
The members of the Commission will be:

The Right Hon. Sir Sidney Rowlatt (Chairman),
Sir Angus Scott, and
Mr. C. H. Roberts.
The terms of reference for the Merthyr Tydvil inquiry are:
To investigate and report whether the existing status of Merthyr Tydvil as a county borough should be continued, and if not, what other arrangements should be made for its local government, regard being had to its own interests and to those of the surrounding counties and county districts.
The member of the commission will:

Sir Arthur Lowry and
Mr. J.T. Richards.

Mr. LANSBURY: May I ask the right hon. Gentleman whether under these terms of reference the Commissioners will be able to investigate the causes which have led to the necessity for these inquiries?

The PRIME MINISTER: I should not think so, but perhaps my right hon. Friend will address that question to the Minister of Health, whose Department is responsible.

Mr. LANSBURY: I think that we may have to put down a Motion objecting to these terms of reference, because, in our view, the conditions which have brought these two districts into the position in which they now are should be investigated in order to prevent such things happening in future.

Mr. THORNE: Will it be in the power of the Commissioners under the terms of reference to recommend that Merthyr Tydvil should lose its charter?

The PRIME MINISTER: It will be within the power of the Commissioners to recommend anything within the terms of reference, which are very wide in that respect.

Mr. STEPHEN DAVIES: Can the right hon. Gentleman give us a little more information about Mr. Richards?

The PRIME MINISTER: Mr. Richards is a practising solicitor in Cardiff. He was Lord Mayor of Cardiff in 1914 and is chairman of the court of referees under the Unemployment Insurance Act.

Mr. BATEY: Have the local authorities on Tyneside expressed their willingness for this inquiry? [HON. MEMBERS "Oh!"] Why not?

Mr. MORGAN JONES: Will it not be possible to put on the Commission of inquiry into Merthyr Tydvil some person who is in sympathy with the Labour view?

The PRIME MINISTER: I am afraid I am not able to answer that question. The Commissioners were selected on account of their local government experience.

Oral Answers to Questions — STRESA CONFERENCE.

PRIME MINISTER'S STATEMENT

Mr. LANSBURY: (by Private Notice) asked the Prime Minister whether he can now make his promised statement on the subject of the discussions at Stresa?

The PRIME MINISTER: I would remind the House that the Stresa Conference was called to consider the Franco-British Declaration of the 3rd February in the light of the information gathered by the British Foreign Secretary and the Lord Privy Seal in Berlin and certain other European capitals. The German military claims of the 16th March which had already, as a matter of fact, been far advanced in execution, and the method of their announcement, influenced in one way or another the whole of the Stresa negotiations.
The first subject dealt with was the request of the French Government that the German action should be considered by a special meeting of the Council of the League of Nations which was summoned for 15th April; and the three Governments found themselves in agreement as to the recommendations that should be made to the Council.
The view of the Stresa, Conference as regards the effect of the German Government's announcement is found in the fifth section of the White Paper under the heading of" "Armaments." This records with regret that at a moment
when steps were being taken to promote a freely negotiated settlement to release Germany from the armament disabilities of Part V of the Treaty of Versailles, the German Government should have chosen that moment to seek the same end by treaty repudiation and to make armament claims of such a magnitude as to invalidate the quantitative assumptions upon which efforts for disarmament had hitherto been based. In spite of this, the three Governments unanimously recorded their continued anxiety to join in every practicable effort to promote international agreement on limitation of armaments, Germany being invited to be a partner to the negotiations.
It was plain that the question of security had been roused very acutely in the minds of the nations of Europe, but in spite of the changed situation the Conference decided still to discuss security in terms of the Anglo-French Declaration of the 3rd February, which it will be remembered contemplates the negotiation of a general settlement with Germany.
The Conference then dealt with what is known as the Eastern Pact, explained by the Foreign Secretary in the statement he made to the House on the 9th April, and it was agreed that endeavours should be continued by the Powers concerned to proceed with negotiations which would cover Eastern Europe with a system of non-aggression and mutual assistance treaties
The second concern of the Conference as regards security (Section 3 of the Communique) was that of the maintenance of the independence and integrity of Austria. The three Powers confirmed their previous declaration that their common policy would continue to be inspired by the recognition of that necessary objective. They also agreed to recommend that representatives of the interested Governments, including all those bordering on Austria, should meet in Rome at an early date with a view to concluding a pact of non-aggression and non-interference for Central Europe.
As regards both the Eastern Pact and the independence of Austria, it will be remembered that the position of this country has always been one of close and friendly interest, but that we have incurred no obligations except that of consultation in the event of the integrity
and independence of Austria being threatened. None further were added at Stresa.
There was also brought to our notice at Stresa (Section 6 of the resolution) the desire of Austria, Bulgaria and Hungary to obtain a revision of the armaments clauses of the treaties by which they are bound. The Conference decided to recommend the interested States to examine the question with a view to its settlement by mutual agreement in connection with general and regional guarantees of security.
The three Powers further agreed (Section 4 of the resolution) to continue actively the study of the proposed Air Pact for Western Europe, with a view to the drafting of a Pact as contemplated in the London Declaration, and of any bilateral agreements which might accompany it.
With Italy, the other guarantor of the Locarno Treaty, we re-affirmed the obligations we undertook when we signed that Treaty.
The Conference ended with the declaration of solidarity with which the White Paper closes.
We went to Stresa to consider, as I have said, past statements of policy in the light of new and somewhat deteriorated conditions. Many people thought that these new conditions would involve new commitments by His Majesty's Government. We have assumed none. Without condoning her recent action, but, on the contrary, making it plain that we regard it as a grave cause of unsettlement and a blow to any international organisation of peace and order, we have kept the door open for Germany to join as an active partner in the movements we have planned to create a system of collective security in Europe.
We have made it clear that our policy will continue to be based on the Covenant of the League of Nations. The three States represented at the Conference departed not as separate units broken by the undoubted difficulties they had to deal with, but as a combination of States pledged to keep together and try to find peaceful solutions for present dangers in co-operation with every State willing to associate itself with their work.
I may add that in the statement I am about to make the House will find that provision has been made for a discussion
on foreign affairs in the first week after our resumption

Mr. MANDER: May I ask what form the future negotiations on these matters will take? Will they be through diplomatic channels, or conferences through the League of Nations machinery?

The PRIME MINISTER: If the hon. Member will wait for the opportunity which I stated that the Government are going to give, that question can be answered. As a matter of fact, 1 have not had time to consult with my right hon. Friend the Foreign Secretary, in whose charge the application of these Resolutions now rests.

BUSINESS OF THE HOUSE.

Mr. LANSBURY: May I ask the business proposed for the House when we reassemble?

The PRIME MINISTER: On Monday, 29th April, and Tuesday, 30th April: Government of India Bill, Committee stage.

Wednesday, 1st May: Report stage of the Budget Resolutions.

Thursday, 2nd May: Supply (4th Allotted Day), Committee: Debate on Foreign Affairs. This day is being given for Supply in accordance with the Government's promise to provide an early opportunity for a discussion on Foreign Affairs.

Friday, 3rd May: Government of India Bill, Committee stage.

On any day, if there is time, other Orders may be taken.

It may be for the convenience of Members if I inform the House that it is not proposed to sit on Monday, 6th May, which is the 25th anniversary of His Majesty's Accession to the Throne. The House will meet on the other days during that week.

Mr. LANSBURY: May I say, in regard to the Debate on Foreign Affairs, that we had intended to ask you, Mr. Speaker, to allow us some time to-morrow in order to initiate such a Debate, but in all the circumstances, and in view of the fact that much of the subject matter of the statement which the Prime Minister has just read is still under discussion, we propose to await the day which has been
provided in the week after next; and with your permission, Mr. Speaker, we shall hope to-morrow to call attention to the national water supply.

SITTINGS OF THE HOUSE.

Resolved,
That this House do meet To-morrow, at Eleven of the Clock; that no Questions shall be taken after Twelve of the Clock; and that at Five of the Clock Mr. Speaker shall adjourn the House without Question put.—[The Prime Minister.]

Orders of the Day — WAYS OF THE DAY.

Considered in Committee. [Progress, 16th April.]

[Captain BOURNE in the Chair.]

Orders of the Day — AMENDMENT OF LAW.

Question again proposed,
That it is expedient to amend the law relating to National Debt, Customs, and Inland. Revenue (including Excise), and to make further provision in connection with finance.—[Mr. Chamberlain.]

3.38 p.m.

Mr. ATTLEE: My hon. Friend the Member for Caerphilly (Mr. M. Jones) dealt yesterday at considerable length with the Chancellor's Budget proposals, and he has therefore relieved me of any obligation to endeavour to cover a very wide field. I propose to call attention to only a few features of this Budget. The Chancellor has many admirable qualities, but among others there is one which I particularly admire, and that is his ability to "get away with it." He has attaching to him, somehow, an air of extreme respectability and orthodoxy which enables him to pursue courses of financial heresy that would appear scandalous in anybody else. In that respect I think he has a very great advantage over the right hon. Member for Epping (Mr. Churchill). We all know the great qualities of the right hon. Member for Epping, but he never quite gives the same impression of solid respectability as does the Chancellor. Whatever the right hon. Member for Epping is doing has always a little touch of the buccaneer, and perhaps of the condittiere, about it. I do not think he inspired confidence in the City. Whenever he was producing a, Budget he was always under suspicion. He was a very eminent robber of hen roosts. The present guardian of our finances is extremely astute, but he acts in such a way that people do not suspect what he is doing. He appears to be correct, while departing from all orthodox finance. If I may compare him with Lord Snowden, I will say that Lord Snowden was always painfully correct in financial matters, but did not escape censure, whereas the present Chancellor of the Exchequer seems to escape censure all the way along.
I want to examine one example of financial heresy. On the side of expenses in his Budget, we get only a slight allusion to the large sums which the right hon. Gentleman has handed out, and undoubtedly will still go on handing out, to various interests in this country. The expenses side of the Budget is full of unconditional doles to the well-to-do. I am bound to say that the most persistent beggar is the Minister of Agriculture. The President of the Board of Trade is catching up. The two of them make constant raids on the Exchequer and seldom come away empty handed. I notice that all these doles are not provided for in the Budget, except by a kind of all-over provision. I very much doubt whether the right hon. Gentleman, if he continues in office, will get away without having to pay a much heavier sum to his two right hon. Friends. We have no particular security in return for the payment of that money. There is no means test. The way in which the right hon. Gentleman shovels out money in those directions would have been quite shocking to some of his predecessors, but it is done by him in such a respectable manner that it looks all right.
Then there is the raid on the Road Fund. That, I noticed, troubled his conscience so little that he even forgot until to-day to put down the necessary Motion to obtain sanction for that raid. I liked his extraordinary cool announcement. He decided to take the money from the Road Fund, but, instead of saying, "Wo do not want that money," he took the bold course. He said:
The need for curtailment of programmes has passed. Already, during last year, we have considerably increased our commitments, and recently the Government, through my hon. Friend the Minister of Transport, invited the local authorities to submit a five years' plan "—
the Moscow touch—
of road construction and improvement. The replies to that invitation are not yet complete, but when they are we hope, with the co-operation of the local authorities, to embark upon a programme which will be considerably in excess of anything that we have yet achieved in a similar period of time.—[OFFICIAL REPORT, 15th April, 1935; col. 1630, Vol. 300.]
Thereupon he took the available balance. It really is a most amazing get-away. He proposes to make an enormous omelette and then he gets away with all the eggs
To do him justice, when the right hon. Gentleman the Member for Epping was robbing henroosts, he could be considered as in dire distress, and his object in robbing hen roosts was either to try to get rid of a deficit altogether or to reduce it to some respectable dimensions. The present Chancellor of the Exchequer robs henroosts in order to create an entirely false surplus, but that is not enough. Of that false surplus of £11,000,000, £7,000,000 comes from the Road Fund and of that £4,000,000 is bare-faced robbery. That £7,000,000 is a non-recurring item of revenue. When the right hon. Gentleman the Member for Epping successfully got hold of some millions of pounds, he tried to use them far a non-recurring expenditure, but the right hon. Gentleman builds up, on this extremely slender basis, remissions of taxation and relaxations of cuts that are to continue. He uses that money to the full. Next year, instead of the £11,000,000 which he is going to spend and for which he has by hook or by crook got the money, there will be an expenditure of £18,000,000 and there will be only £4,000,000 with which to meet it.
Ordinary people would say that that was thoroughly unsound finance, but the right hon. Gentleman is like a man who moves into a more. expensive house on the rather slender basis that he has managed to win half-a-year's rent in a lottery. What will happen next year he does not know. That is what gives to the Budget its curious temporary character. What I have spoken of might be regarded as minor financial peccadilloes. Suppose that we weigh the Chancellor in the kind of exacting scales that would be applied to a Labour Chancellor, and that were, in fact, applied to his predecessor. Let us remember that the Labour Chancellor was expected to provide £66,000,000 for Sinking Fund. That has gone. There is no Sinking Fund provision at all. We have got out of the area of sinking funds. He also had to provide something like £50,000,000 for the American Debt. The American Debt has faded beautifully away. It used to make an annual appearance. First of all, the Chancellor of the Exchequer subscribed a small sum to keep it alive. Last year he took off his hat to it; this year he ignored it altogether.
Lord Snowden had not the characteristics of getting away with it which
the present Chancellor has. If he had only made up his mind to raise money by the non-payment of the American Debt and to depart from the financial principle of providing a Sinking Fund, he would never have imposed cuts on the unemployed or upon the Civil Service. I was rather struck by one remark which the Chancellor made towards the end of his Budget statement, and I hope that he will let us into his confidence a little more on the point when he replies. He said:
Broadly speaking, we may say that we have recovered in this country 80 per cent. of our prosperity. Our task is now to win back the remaining 20 per cent. [OFFICIAL REPORT, 15th April, 1935; col. 1637, Vol. 300.]
I should like the right hon. Gentleman to give us a picture of what is 100 per cent. prosperity for this country. I do not know whether the Chancellor was looking at the past or the future, or whether he had some ideal in his mind. Did he mean by prosperity a condition in which everybody would have a fair standard of life? Did he mean that people would be fully employed and well housed? If he is so very definite, if he can talk of 80 per cent., he must know what he means by 100 per cent. Or does his prosperity envisage a continuance of 2,000,000 unemployed? I have a suspicion that his prosperity only means getting back to 1929. The year 1929 has slipped into the past, and to-day it looks as if it was relatively prosperous, but we did not think so at the time. Complaints all round the House at the conditions in 1929 were frequent and serious, and we shall not have got anywhere near where we ought to get if we only get back to 1929.
I want to know whether the right hon. Gentleman is really as satisfied as he seems to be. Is he really satisfied that we have got so near to prosperity as that? Does he really think that we shall make a substantial advance towards prosperity in the next year? That prosperity must not be the prosperity of one class of the community only; it must not relate to only one district in the country. The right hon. Gentleman has well pointed out that:
We have ever before our eyes those districts, once the seat of our most prosperous industries, which to-day still lie under the shadow of world depression.—[OFFICIAL REPORT, 15th April, 1935; col. 1637, Vol. 300.]
The right hon. Gentleman had very little to say about world conditions; he had very little hope to offer of a betterment in world conditions; he had nothing to propose for dealing with the problem of these depressed areas; but we cannot suggest for a moment that we are getting within sight of prosperity until we have very different conditions in South Wales, on the North East coast, in Cumberland, in Scotland, and in other parts of the country.
What strikes me about this Budget is that it does not show any grasp of the realities of the situation. To-day we have very low money rates. The right hon. Gentleman has pointed out that, when he last addressed us on the Budget, he thought that that was quite an exceptional thing. He was only paying its. 12s 6d. per cent. for his short-term, accommodation and he rather warned us that that was not enough. This year again he has had the same advantage, but he is a little inclined, I think, to accept it as something which is always going to continue. Last year it was a fortuitous advantage; this year it is something on which he can build for the future, because he makes no provision whatever for any change in these rates. The Chancellor has utilised cheap money for a number of changes in the National Debt; he has taken advantage of it to make conversions. The question now is, how is he going to utilise this cheap and abundant money in the future? Undoubtedly, cheap money has helped him in his conversions, but an abundance of cheap money means that there are resources which are not being used, that people are not yet prepared to take it up. I would ask the right hon. Gentleman whether he has any plans by which he can go ahead with conversion, if that be in his mind—whether he could not manage to effect a big-scale conversion of municipal debt, or whether it would not be possible to effect a scaling down of debts all the way round? It is no use saying that you have money in the bank if you do not get any effective results from it.
We have had this idle cheap money for a considerable time, and it looks as if it were only the -Government that could fully utilise it. I do not, however, see any signs in this Budget that the right hon. Gentleman has any plans, whether for one year, for two years, or for five
years, for making use of this idle money, for bringing the idle money and the idle men together. I think that the right hon. Gentleman in his Budget speeches is apt to look too much at the channels by which he collects his revenue, and not enough at the wealth production of the country, from which, after all, he must draw his resources. He is cheered by the fact that additional cups of tea are being drunk; he is cheered by the fact that more beer is being drunk; he is cheered by an increased consumption of sugar. He is cheered by these facts because, for every cup of tea, for every piece of sugar, and for every mug of beer, the Exchequer gets some advantage, but that does not necessarily effect a real advantage to the country. What the Chancellor really has to look at is whether we are increasing the body of wealth in this country, on which we all have to live and from which the State has to draw its resources. It would be far more effective if the right hon. Gentleman could point to a great development, let us say, of drainage works, which would add to the agricultural wealth of the country, or to any development which was going to create wealth in the country. He would then have a far sounder backing for his Budget than any mere ability to draw more money from a particular source.
It appears to me that that is the weakness of the right hon. Gentleman as a Chancellor of the Exchequer. It may be that I should say it is the weakness of the Government as a whole, but it is the business of the Chancellor of the Exchequer to point out to his colleagues, and I am sure he has done so, that his Budget is balanced very precariously. He knows the disturbed conditions of the world; he knows how much he owes, for the balancing of his Budget, to a continuance of low money rates; and he knows that, as I have said, what he needs ultimately for his Budget is prosperity, and that the heaviest continuing loss which this country has sustained is the loss of the wealth-producing power of so many of its citizens. That is the real point where I think the Chancellor of the Exchequer tends to take a narrow view. It is necessary to look, in the Budget returns, for the prospects of putting people to work it may be from the immediate point of view of balancing the Budget, but from the real point of view of adding to the resources of the country
every man who is put back into work strengthens and fortifies the Chancellor's revenue position.
In this Budget I see no attempt at any long-term planning; it is essentially a mark-time Budget. The right hon. Gentleman has managed to get, somehow or other, a little butter for his bread, and he has spread it on mighty thin. But when we come to the end of this period of the National Government, whatever the right hon. Gentleman may claim to have done in regard to some industries, the Government, when the time comes for them to be judged, will have to face the fact that they have not met the really big problems which have confronted them. They are still faced with a mass of unemployment. They are still faced by the conditions of the distressed areas. We are not by any means out of the crisis of capitalism, and I suggest that the right hon. Gentleman, if he wanted to go ahead, would have gone in for an expansionist policy, for utilising to the full these reserves; but it seems to me that what obsesses him, and so many Members, is less the desire to get things done, than to see how on earth they are to get money out at interest. Of course, that is really the position we are facing to-day.
The right hon. Gentleman is fortunate in having low rates for his borrowing, but the fact is that we are met to-day in this country, as in the world generally, by a breakdown of the money-lending system, and what is upsetting so many people is that they do not see how they are to get interest on their money. Well, let the State use that money, and see that it is used for the good of the nation. We do not want to see high rates of money. We want to see the fullest development of the resources of the nation, and I am sure that the right hon. Gentleman is entirely out if he imagines that we have reached anywhere near the possibilities of the economic well-being of this country in the machine age in which we live. In this very Budget we have an example of how a new invention, which is being fully developed, is to be hampered in the interest of vested interests. The Chancellor of the Exchequer is going to hamper the use of the vehicle with a Diesel engine because he is afraid if that comes in he will lose, half his revenue.
That argument exactly illustrates the point I made a few minutes ago, namely, the tendency to look at these things from a narrow Treasury, accountancy point of view. If, as a matter of fact, a vehicle with a Diesel engine is a more economical and a more efficient form of transport for this country, then its utilisation, instead of the petrol engine, must be to the advantage of the wealth of this country; but if you take the narrow taxation point of view, the Chancellor of the Exchequer sees a loss. What I see in this Budget, and in previous Budgets of the right hon. Gentleman, is a failure to get at the realities behind the figures, and exactly the same way with the distress in the country. There are many people in this land who do not get at the reality behind the figures, but that reality is clear today, and unless this Government can deal with it, it will, as the Lord President said, go down like every other Government.

4.4 p.m.

Mr. DAVID MASON: With a great deal of what the hon. Member for Lime-house (Mr. Attlee) has said, I am in full agreement. I agree that when the right hon. Gentleman does indulge in a raid, he does it in a respectable manner. I should like to offer my congratulations along with others to the Chancellor of the Exchequer for his lucid exposition. Whether we agree with him or not, I am sure that his unfailing courtesy is appreciated by every Member of this House. He concluded his observations with the following statement:
But, taking the country as a whole, looking back over these 32 years, we can see the improvement has been solid, continuous and steady. To that result many things have made their contribution—tariffs, conversion operations, cheap money, balanced Budgets, remissions of taxation. They have done it largely by creating a spirit of confidence. Confidence is the mother of enterprise, and, when it operates upon many individuals and through many channels, it is far and away the most effective form of promoting a general and rapid expansion of economic activities.—[OFFICIAL REPORT, 15th April, 1935; col. 1637, Vol. 300.]
With the latter sentence I am certainly in full agreement, but I propose to offer a few remarks upon his conclusions, namely, that this improvement is due to tariffs, conversion operations, cheap money, balanced Budgets, etc. With regard to tariffs, I was very much impressed with what the hon. Member
for Caerphilly (Mr. M. Jones) said as to a remarkable article in the "Economist" about how the present burden of taxation presses so hard upon the poor. That article is very interesting, and particularly some figures which they gave showing that, comparing '1934–35 with 1925–26, the yield of Income Tax, Surtax and Death Duties had declined by £35,000,000, while Customs and Excise had increased by no less than £52,000,000. Whatever our views may be as to Free Trade and Tariffs, there is no doubt that when you find an increase so tremendous as that, and know that a tariff presses upon all sections of the community, the poor equally with, and even in greater ratio than, the well-to-do, we must admit that the policy of the National Government is putting an undue and unequal burden upon those who are least able to bear it. It is quite true that that is partly off-set by the large sums spent upon social services. It is not, of course, that this affects particular sections, but it does unquestionably press very hard upon those least able to bear the burden, and also the least able to effect the remedy.
I come to the second point in the right hon. Gentleman's policy, namely, the conversion of the National Debt, and I do congratulate the right hon. Gentleman and those associated with him at the Treasury on the skilful manner in which they have conducted these operations. I observe that in 1925–26 the interest charged was no less than £308,200,000, and that it was reduced in 1934–35 to £211,600,000, or a saving in interest on our National Debt of no less a sum than £96,600,000.

Dr. ADDISON: The first figure is due to some redemption of the Sinking Fund.

Mr. MASON: That may be. It is estimated that about £80,000,000 is a fair sum saved per annum on the National Debt.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): The debt charge is £355,000,000.

Mr. MASON: Thank you for correcting my statement, but there has been a saving in the interest charge of no less than £96,600,000, or last year something like £80,000,000. I would ask how this large sum is being used? Of course,
various items contribute to this revenue, but I think it will be admitted that the saving by the conversion of National Debt is far and away the largest item which has enabled the right hon. Gentleman over a series of 3½ years to produce these surpluses. That is the source which accounts for the largest part of the surplus in his annual statement which he has been enabled to produce. I would ask him how he has used it? I think last year the National Debt was reduced to the extent of £21,750,000, but I think it will be agreed that nearly half of the larger sum has gone in subsidies. If you take the housing subsidies, the amount is anywhere between £30,000,000 and £40,000,000 in subsidies. So that we find that this large sum of between £80,000,000 and £90,000,000 which has been rendered available has been largely used for subsidising various interests, and that the relief of taxation and the relief of other sections of the community is comparatively small. One half of this large sum has gone to subsidise sugar, shipping, beet and so forth.
The net result of all these expenses is to leave a surplus of £5,610,000—a mere trifle. One would have thought that with this £80,000,000 to £90,000,000 the right hon. Gentleman would be able to make large remissions of taxation to give great relief to industry, whereas he is able to produce only a surplus of £5,610,000 and then, as the hon. Gentleman reminded us, he adds to that his raid on the Road Fund. Of course we all deprecate it. Even with this large sum at his disposal, he has had to come before us with only £5,610,000, and has had to put his hand on £4,470,000 from the Road Fund to produce an ultimate surplus of £11,025,000. What has enabled him to do it? He tells us that it is largely due to cheap money. He takes full credit for producing cheap money. Having regard to the contraction of trade all over the world, I ventured to ask him if he believed that the Government were entirely responsible for cheap money and he said: "Yes, entirely." So that he is confident in his own belief that he is able to provide us with unlimited cheap money for all time. Is he able to do it? He has admitted that his policy, which is an inflationary policy perpetuating paper currency, is to provide us with cheap money, and it is
interesting—if I do not weary the Committee with too technical matters—to find out how he is able to guarantee for a long period a policy of cheap money. He does it, of course, by adding to the currency, and he is able, under the Exchange Equalisation Account, and the arrangements made with the Bank of England when gold goes into the bank, to issues notes against that gold.
When I accused the right hon. Gentleman of pursuing an inflationary policy the other day, he said that when the Bank of England had increased its gold reserve by £50,000,000 that justified the continuous use of notes; but, if I may say so, he does not understand what an inflationary policy is. What is inflation? After all, we are here to try if we can to understand this inflationary policy. Inflation in a currency is when there is an excess of currency beyond the immediate requirements of the country and when there is any inflation in any country at any time it may be tested by comparing the old Mint price which was 85s. per fine ounce with the market price which is quoted every day.

Mr. DENMAN: Is not the essential test whether there is a rise in commodity prices or not?

Mr. MASON: I will come to that matter. It is not the essential test. If you wish to test whether your currency is inflated or depreciated, you adopt this simple method. It is not my method, and it is well known to authorities on finance. Adam Smith used it more than a hundred years ago. The Mint price is 85s. for an ounce of fine gold, and you compare that figure with the market price which to-day is about 145s. It means that to-day you require in our currency £7 5s. to purchase what we were formerly able to purchase for £4 5s., and the difference between £7 5s. and £4 5s. is the measure of the inflation that exists. [Interruption.] Perhaps hon. Members will allow me to develop my argument. It is very difficult to deal with these technical matters, and I am trying to make my meaning as clear as possible. What has been done by the Chancellor of the Exchequer and the Treasury is to continue to depreciate the pound. The other test is the state of your exchange. When you have a depreciated currency the fact is reflected in the adverse exchange, and the
exchange has been adverse in this country for something like 10 or 15 years, largely because of this fact.
The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) and my right hon. Friend the Member for Darwen (Sir H. Samuel) referred to the question of stabilisation, and there are many hon. Members in this House who are alive to the dangers of the continued fall of the pound, and we are anxious to try if we can to stabilise it. I will briefly summarise the history of the pound. When we came back to gold in 1925, when the right hon. Gentleman the Member for Epping (Mr. Churchill) was at the Treasury, there were two policies associated with the question. We pressed upon the right hon. Gentleman two things. One was that he should practice economy and balance his Budget, and the other was that, in order to maintain himself on the Gold Standard, he should not only determine the convertibility of, but should contract gradually his paper issues. He did neither. He was extravagant. He added something like £30,000,000 to £40,000,000 of expenditure to the country. The party to which hon. Gentlemen above the Gangway belong when in office were governed by the same principles. It was undoubtedly agreed that they were extravagant, and they added to the debt at the rate of £1,000,000 a week, and the then Chancellor of the Exchequer (Lord Snowden), who was perhaps the one most deserving of censure, presented a deficit of £120,000,000. The right hon. Member for Epping did neither of the two things to which I have referred, and the exchange was therefore continuously against this country. He did not contract gradually his paper issues. When Lord Snowden was at the Treasury he was appealed to by the Bank of England to increase the fiduciary issue by £15,000,000, and the result was still further to accentuate the run on the Bank of England, and gold bullion was withdrawn by Paris and Holland, with the result that we were forced off the Gold Standard in 1931. The result of the redundant paper issues is reflected in the adverse exchange and the continually falling pound.
The policy which the right hon. Gentleman is now pursuing is precisely to carry on with this accentuated provision of cheap money. We would all rejoice in a natural supply of cheap
money, but he is deliberately depreciating our currency, which is proved by the fact that the pound is worth only 11s. or 12s., and the purchasing power of sterling is not rising. The right hon. and gallant Gentleman the Member for Ripon (Major Hills) also mentioned yesterday that sterling had not depreciated, but I hope that I have been able to show that sterling has depreciated. He also said that sterling prices had not risen. That is quite true. Sterling prices have not risen materially, but the fact is forgotten that sterling prices have not fallen. The discount on the pound to-day is 42 per cent. My right hon. Friend the Member for Darwen referred to the fact that the pound had depreciated and had fallen by 12 per cent. last year, but I believe that I am right in saying that the discount of the depreciated pound to-day compared with the old Mint price is 42 per cent.
Some hon. Members may say why should we discuss these percentages when we are off gold. We are not off gold. We are off the old gold parity. All the quotations in the "Times" and other newspapers are based on gold, and you cannot get away from the fact. The great desire to-day is to get back as soon as we can to this common denominator so as to form the foundation of the restoration of trade. There is no other way. Hon. Members cannot offer any better solution. Those who advocate a managed currency believe there is no remedy except to get back to a common denominator. Therefore, I appeal to the right hon. Gentleman to realise the supreme necessity of staying the further sagging of the pound. As I have said, although sterling prices have not risen, the fact that sterling prices have not fallen compared with gold prices is an indication of inflation. It means that the wage earner in receipt of a definite wage is being mulcted or robbed to the extent of 42 per cent, of what he would get if we were on gold. Many people may have incurred debts 10 years ago, and to-day they are paid back in pounds, and £100 is worth only £58 when compared with the price of gold. The same thing applies to wages. Are the working-class of this country aware of the fact that the effect of this subtle influence is really equivalent to a reduction in their wages because it
reduces the purchasing power of those wages? I make this submission to hon. Friends above the Gangway. I have often quoted in this House what Daniel Webster said in America when America was passing through a similar experience:
He who tampers with the currency robs labour of its bread.
You are, without his knowledge, by this present method of finance reducing the purchasing power of his wages, and it is therefore equivalent to a reduction in wages.

Mr. LOGAN: The hon. Member is talking about the pound and its value, but I am concerned with the question of bread and butter, and want to know what would happen if there was no gold at all.

Mr. MASON: It is rather difficult to deal with a wide reference of that character. I only ask the hon. Member to do me the honour to read the OFFICIAL REPORT to-morrow. I have tried very hard to be clear and lucid. The hon. Gentleman is right, for it is a question which refers to our bread and butter. It is essential that we should try to base this matter on sound finance in order to help the working-class, the rentier class, and trade. Not only do the Treasury by the policy of inflation pay little or no attention to the falling pound, but the question affects the rentier class as well as the working-class. Whether they wish it or not, they have to bear a reduction in income owing to conversion. I rejoice in conversion as one anxious to relieve the burden of the taxpayer by a reduction of interest on the National Debt, but this cheap money policy forces up the prices of gilt-edged securities. As was stated in the debate yesterday, a larger sum comes into the Treasury from Estate Duties as a result of the inflated values.
The right hon. Gentleman in his Budget speech referred to the Exchange Equalisation Account, and. I was interested to hear him say that he rejoiced that hon. Members did not press him to disclose any details. Speaking for myself, I have been pressing all the time for details, as I think that the hon. Member for Caerphilly (Mr. M. Jones) and the right hon. Gentleman the Member for Swindon (Dr. Addison) also pressed for
information. It will be within the recollection of hon. Members that a number of questions have been put during the last few weeks pressing for these details, and I think that we are entitled to press for them. A sum of £350,000,000 used as part of the machinery for this most unsound finance, is voted by this House, and yet no details are vouchsafed to us. He spoke with greater emphasis about the profit that had been made. Why cannot we be given an account which shows the profit? If the pound is continually falling and gold bullion comes into the Bank of England at the old Mint price of 85s. per fine ounce, the difference between that and the market price at which the Exchange Equalisation Account would buy makes it obvious that unless the right hon. Gentleman stabilises at or about the present rate of exchange there would be a loss and the taxpayer will have to make good the difference. If he stabilises at or about the rate of exchange it is obvious that the bullion will have risen in value and then he will be entitled to say that it shows a profit. It is rather a misleading statement to put the matter in the way it was put by the right hon. Gentleman. There is all the difference in the world between a mere statement showing a profit and an account which has made a profit. That is the true test.
I am anxious to use this opportunity which I value, to appeal to my hon. Friends in all parts of the House who are interested in this question. It is not a party question. We may differ and we shall continue to differ on the questions of Free Trade, tariffs, quotas and so forth, but I think we are all agreed that the foundation of civilisation in any country in the world, the foundation on which we carry on our trade, is that we should have a currency system which is sound and that there should be a common denominator.

Sir GEORGE GILLETT: The hon. Member is surely not suggesting that the Exchange Equalisation Fund is entirely limited to the purchase and sale of gold?

Mr. MASON: No. I do not suggest that for a moment, but the purchase and sale of gold is I believe very considerable. However, we are at a loss to know what actually happens because we do not get an account.

Sir G. GILLETT: I would point out that if purchases and sales have been made in dollars and francs the profit that was mentioned by the Chancellor of the Exchequer may have nothing to do with gold.

Mr. MASON: That is true, but it is impossible to say. I assume, however, from the imports and exports of gold that there is a large holding in gold both in the Bank of England and in the Exchange Equalisation Account. If stabilisation takes place we shall know where we are, and if there be a deficit we should have to write it off as a loss. To assume, as the right hon. Gentleman assumed so complacently, that everything is "solid, continuous and stable," misrepresents the situation. No one would for a moment in any part of the world, certainly not in the United States of America, in France, or in Belgium would suggest that all is well and that we shall continue in the present course. If we continue our attitude of taking no notice of the fall in the pound sterling because it does not have much effect internally, it will mean eventually that there will become a scarcity of commodities and we shall feel it severely. If the external value of the pound is only worth, say, 12s., it means that Great Britain as a great buyer of raw material and food will have to pay more for it. We have to buy our cotton, our wool and other things and the continued fall in the external value of the pound is bound to have an effect upon our import and export trade. To suggest therefore that all is well is to mislead the country and to misrepresent the situation as it is to-day.
Hon. Members may say that we attack the Government, the Treasury and the Chancellor of the Exchequer, and they may ask what I would suggest should be done. That is a very fair question. I suggest that the situation cannot be remedied until the Government take steps either by approaching the United States or by acting on our own initiative to deal with stabilisation. I would much rather that my own country led in these matters. Great Britain is the natural leader in the financial markets of the world, and I hope that the right hon. Gentleman will take his courage in his hands and take steps to appoint a committee of experts to
examine into the reasons for the high price of gold bullion, and to make some recommendation which he could either reject or accept. That would be some move towards stabilisation. Unless we have stability of exchange how are we going to restore our foreign trade? Many complaints have been made that the right hon. Gentleman said little or nothing about the great basic industries and the distressed areas. There are 75,000 people unemployed in Durham, and of these 25,000 are shipwrights and mechanics engaged in shipbuilding, and 11.500 are engineers.
My right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) has produced what is called the new deal. If he can offer any scheme to this Government or to this House which will be helpful, I am sure that the House will give it sympathetic and favourable consideration. Meanwhile, I would point out that the shipwrights and engineers have been brought up to those skilled trades. Are they going to go on the land? What these men desire above all things is the restoration of our foreign trade, the restoration of our shipping industry, and to see Great Britain pursuing her ancient role, for which she is naturally suited, that of a great exporting and shipping country. We have the greatest mercantile marine in the world and we built half the ships of the world, but I would ask hon. Members to think of the ships that are laid up. Let them look and reflect on the state of our foreign trade. Let them remember how much our foreign trade has contracted. It may be said that that contraction is due to excessive restrictions, and that is true. Even a very pronounced tariff reformer in this House has protested against the excessive zeal for quotas and restrictions. In former days we had a common denominator, we had a stable exchange, and unless we have that stability in the future as our foundation it will be impossible for this country ever to restore its trade. However willing we may be to support the right hon. Member for Carnarvon Boroughs, or any other human being who is able to bring forward any scheme that offers a prospect of finding more employment for our people, I am convinced that the natural role for this country is to do what it can to advance the question of the stabi-
lisation of the exchanges and try to persuade other countries to do likewise. I believe that if we took that vital step towards stabilisation the United States would do likewise; and Belgium and France are waiting. What an opportunity there is for the Chancellor of the Exchequer. I should be very glad to congratulate him if he took a lead in the direction of sound finance.

4.41 p.m.

Sir JOHN SANDEMAN ALLEN: I should like to add to the list of those who have congratulated the Chancellor of the Exchequer both on the manner and the matter of his speech in opening the Budget. The Budget has favourably impressed many people not only in the House but outside. I was deeply interested in his review of the trade conditions of the country. Unless our trade improves everything else will become impossible. We talk very often about unemployment, but we all know perfectly well that we can never put people into employment permanently except we first of all see that we get our trade on a proper footing. We have to provide the sinews of war in the normal and regular way through the channels of trade. Before I deal with specific points in the Budget there are several incidental matters to which I should like to call attention. I listened with considerable interest yesterday to the speech of the hon. Member for Caerphilly (Mr. M. Jones). A good deal of what he said was interesting and instructive, but I was very sorry that he departed from his first impression. Second thoughts are not always best in these matters. The particular reference in his speech with which I should like to deal was the question of the American Debt, it was rather unfortunate to compare the American Debt which is a war debt and which if not legally in every other sense is set off entirely by money which is due to us, is totally different from the ordinary current obligations of business debt. It is a great pity to give an opportunity for foreign countries to offer foreign nations an excuse for repudiation. It is very important that we should bear in mind the enormous difference between an ordinary debtor and creditor in an ordinary business transaction and the circumstances of the American Debt.

Mr. MORGAN JONES: Does the hon. Member suggest that more debts should be repudiated?

Sir J. SANDEMAN ALLEN: It is for everyone to deduce what views he thinks fit. My views are perfectly clear on the subject. We listened to the speech of the right hon. Member for Darwen (Sir H. Samuel) with much pleasure and he was rather more humorous than usual, but he was rather restrained in his criticism of the Budget and did not give it the full meed of praise he no doubt felt was due. The right hon. Gentleman always speaks in a restrained manner. There was one thing that he said which rather troubled me when he spoke about the depreciation of the pound. I resent the term "depreciation." The pound has not depreciated. If you take the old fanciful ridiculous gold standard and that is your measure, then everything has depreciated. In those countries that are still on the gold standard things have so appreciated that the cost of living is 40 per cent. higher than before. In this country instead of the working classes being robbed by what is going on, they have benefited enormously because they get the same for their money as they did before. I am not a financial expert, but an ordinary business man who looks at things from the practical rather than the theoretical point of view. We must remember that in this country we deal with a big area. We get our wool from Australia. There is no question of any gold standard there. We get most of our food from the Dominions and America. America is in the same position as ourselves in certain directions. There is no real danger at all in these transactions.
Therefore, we feel strongly that it is a great mistake to have gold on our brains instead of having practical and daily progress in business, and in the things that we can deal with. We see one country after another suffering from that gold complaint. Belgium has gone off gold, arid Belgium, I think, has made a mistake, as is largely admitted in Belgium, in not agreeing to attach itself to sterling straight away. I have no doubt she will do so, however. We have a growing basis for our currency, and I am sure many of us congratulate the Chancellor of the Exchequer on the way in which he has handled the currency situation of the country during a very critical period. The Equalisation Fund shows how wisely he
has acted. How can we stabilise in the midst of chaos? We do not know where we are or where we shall be to-morrow. I entirely agree that we shall never develop our trade until we have some measure with which to measure the values of the different currencies, but what the measure is and how it can be arrived at I do not know at present. We must wait until we come out of the present chaos, but we have to clear several things out of the way before we can get the stabilisation of money on a sound and proper basis. It would be no good our starting to stabilise at present. There is an old saying, "Once bitten twice shy," and that must be our motto in this matter, although it may mean that we have not the courage of the hon. Member for East Edinburgh (Mr. D. Mason), whose consistency we admire and whom we put on a pedestal by himself.
I want now to come to another point, and that is the value of the reductions in Income Tax made in this Budget, or what to my mind is equally important so far as industry is concerned, and that is freeing the reserves of business concerns from Income Tax so long as those reserves are used for replacement of machinery or for developing the business. It seems to me that this is one of the methods of increasing consumption in this country, or, in other words, it is the power of industry to consume more, and it is equally important to the general increase of the purchasing power of the community. They must run together, and if you do not develop one, you are curtailing the other. If any industry wants to press for a reduction of Income Tax for its own purposes, it is no good, and if the community want to press for their own advantage and cut out the others, they are ruining themselves. The two are mutually dependent on each other, and therefore I do not agree that the reduction of the Income Tax would be merely advantageous to the rich. Nothing of the kind. It would be advantageous to the country as a whole. On the other hand, it is most important that the questions of reserves and of obsolescence should be studied, and I hope they will.
I now come to the question of soya beans. My Liverpool colleague the Member for Wavertree (Mr. Cleary) yesterday had not, I think, quite grasped the position. So far as the crushing firms are
concerned, they will simply have to increase their supplies from palm kernels and ground nuts, which are products of the Empire.

Mr. LOGAN: As I had approached the President of the Board of Trade with regard to palm kernels, would the hon. Member explain the difference between soya beans and palm kernels in relation to the Merseyside trade?

Sir J. SANDEMAN ALLEN: I think the whole story will be better explained later, but I have received communications from Liverpool business men on the subject as well as knowing a good deal about the matter myself and, as I say, palm kernels and ground nuts are products of the Empire, mainly shipped to Liverpool from West Africa and other British Colonies which depend for their existence on their trade with this country, instead of purchasing from Manchukuo and Japan, which purchase very little from us. When the soya beans were left on the free list it was believed that there would be no competition with their goods, but as a matter of fact competition has been extraordinarily keen recently, and the import of soya beans has trebled since 1919, whereas the imports of palm kernels has diminished in the same proportion, while ground nuts have remained stationary. During the last few years the European countries and America have put on tariffs and prohibitions, practically shutting out these products of our Colonies, and therefore it is satisfactory to feel that steps are being taken to rectify this matter.
Incidentally, I wish to call attention to the fact that the advantage from crushing soya beans, owing to fall in price, has not gone to the consumer, because the entire production of the crushers was sold in 1934 at the same price as in 1933, although the average price of beans was 9 per cent. lower. As far as West African products are concerned, the average prices to-day are something like 40 per cent. below prewar, which bears very heavily on the producer, who is almost entirely native. I therefore congratulate the Chancellor of the Exchequer on the steps he has taken. I am sure my colleague who spoke yesterday will not think I am picking him up in any way, but, as a matter of fact, I have received this information, which I would have handed to him beforehand if I had had the opportunity. I think the Committee
is entitled to have this information, which fully justifies the action of the Chancellor in bringing forward this tax. It is a matter which appeals to us all, and it is clear that it will help and not hinder our own people.
I want to revert to what the hon. Member for East Edinburgh said, because I think it is well that we should realise our true position and that the policy of the Government has enabled us to maintain our financial and our general position throughout the world. I am satisfied that if we look at the matter carefully, when we talk about tariffs—and I can. speak as one who until 1930 was most bitterly opposed to a general tariff or to food taxes of any description—those of us who had that view then were probably right originally, but 1;o hold that view to-day in these changed conditions is to shut one's eyes to the entirely altered condition of affairs and to disregard all sense of proportion. The cost of living has not suffered by the Government's policy at all, but there has been a readjustment and a complete change in these matters.
I would refer with a certain amount of diffidence to the question of unemployment, and particularly as it has a bearing on the distressed areas. I am quite satisfied that in the distressed areas of the country generally there has not been an appreciation of the enormous load which the Government took off the local authorities under the Act of 1934 and the arrangement made in that connection from the 1st March, and I am satisfied, in spite of the fact that the Chancellor of the Exchequer has on two or three occasions announced that 95 per cent. of the cost of maintaining the able unemployed in insurable occupations is borne nationally, that that fact has not got home to a very large number of people. I have found that out myself in my own division. Despite the fact that the Government has removed this heavy burden from the local authorities, and found very large sums for the Supply Services, we still have a surplus, and I think that is very creditable to the right hon. Gentleman.
On the other hand, the Chancellor had some provision in connection with last year's Estimates, and this has unfortunately "gone down the sink" of debt redemption. I do not speak as a financial
purist. There has been a great disappointment in the distressed areas over one point, and that is that the very heavy burden which the Government has relieved the country in connection with the local authorities did not come before the 1st March, owing to an unavoidable delay. There was a possibility, and the money was there, but I understand that when the Chancellor of the Exchequer is reproached with accusations of breach of faith because people have misundertood the whole position, the right hon. Gentleman has remembered the old proverb, "Hard words break no bones"; but there is another proverb in the North which I expect the right hon. Gentleman knows, and that is "Soft words butter no parsnips," and if a little later on we may come to him, not with any complaints, but on bended knees, and say to him "Here are distressed areas and we want you to give us something," I hope he will remember the nice words of sympathy he used when he opened his Budget.
On looking at the Budget and the right hon. Gentleman's Estimates, one realises that they have been extraordinarily cautious and conservative, and unless some calamity comes, he will have more in hand than he has very wisely put down in his Estimates, and consequently there will be a margin to deal with these questions. Some people say that this is an election Budget, but it certainly is not and I hope it will not be treated as such. It is a very sound and progressive step towards clearing up our difficulties and troubles, and those of us who know what the situation is abroad, having come back from a tour of the Empire, know what they feel all round as to the wonderful recovery which this country has made. The trouble is that people are so obsessed with their local difficulties that they cannot see the wood for the trees. I think that these debates will clear the air and people will realise the sound financial position in which this country finds itself and the steady progress that has been made. We therefore beg to congratulate the Government and the Chancellor of the Exchequer on all that they have done to bring about this improved state of affairs.

5.0 p.m.

Mr. MARCUS SAMUEL: I have read about maiden speeches, and I now rise to make my own. I begin to realise that the
moment of waiting is perhaps worse than speaking. I think it would have been the desire of my late uncle that his successor should make his maiden speech on the Budget. Like him, I have always been associated with the City, with trade, banking, shipping and international commerce. Speaking, I think, for the great bulk of those in this country similarly engaged—or anyhow for most of my friends in the City—I say that the Chancellor of the Exchequer in this Budget has added further to his reputation for sound principles of finance. That is simply another word for common sense and no nonsense. That is my view, and I believe it is the view of most of my friends; it is the view of all I have seen during the last few days. The work of the world is still carried on outside Parliaments, and in spite of all politicians, and the Chancellor of the Exchequer knows that unless proper exertions are made, this may be the last Budget which does not make impertinent interference with the credit structure of this country. Hon. Gentlemen opposite are making control of banks the pivotal point in their programme. We have heard many complaints about the Bank of England, the Clearing House Banks, and other credit institutions, but if we look back to the financial history of this country over a period of 70 years, during which there have been periods of enormous expansion, and also of corresponding contractions, you will find that our banks have accommodated themselves to all of them, and that during the most difficult times they have always managed to see the country through without any great calamity.
Nothing but admiration can emerge from a real knowledge of how wonderfully the system works. I will give an instance. With a gold reserve of less than £200,000,000, currency and credit transactions dealing with a national income of over £4,000,000,000 have been successfully dealt with in one year, and in the same year the Bankers' Clearing House turnover was well over £40,000,000,000; from which one can gather the enormous importance of English banking in assisting in carrying on world trade. Incidentally, I may mention that in that year the French match monopoly made 40,000,000,000 matches. It is not of great importance, but it gives some idea of the number of pounds. This
Budget does further credit to the Government, in addition to all the other credits it has accumulated during the past three years. I remember that in 1928 at the 28th Annual Conference of the Labour party at Birmingham, the mouthpiece of the Socialist Labour party on financial matters, Mr. Snowden, as he then was, said:
I believe we may reasonably look forward to a very considerable reduction in the rates of interest within the next 10 or 20 years.
He was referring to a reduction from 5 per cent. to 3½ per cent. He was a staunch supporter, as we all know, of the gold standard. It is clear from what occurred in 1931 that such a reduction could never have happened under a Socialist Government. Yet this National Government accomplished it during its first two years of office by an intelligent combination of financial measures and protective measures, and taking advantage of the fact that we are everybody's best customer and that we cannot be replaced as buyers, though in most cases we can find other sellers if we change our custom. That has been a great help to us in all sorts of negotiations. The result has been the remarkable stability in the purchasing power of the pound. Our bread has not cost us more, although I have read pamphlet after pamphlet saying it would cost us more. Most other articles have also been maintained at steady prices. Had the purchasing rower of the pound declined there is no saying to what heights the cost to the consumer of primary commodities might not have risen, or to what low value poor peoples savings bank deposits might not have declined. The Government deserves to be congratulated on the amount of small savings which have increased to over £190,000,000 from 1931 to 1934. The figures are given by the hon. Member for Chislehurst (Sir W. Smithers) in his report of progress towards recovery recently published in the "Times."
During the Debate we have had a lot of talk about the coming election. Up to 1931, post-war elections were very much influenced by bids; it was a sort of auction on the basis of increased expenditure on social and other services. The crisis in 1931 was the turning point. The bidding, so far as the National Government is concerned, was stopped. Yet even to-day we are supporting social
services at an expense of £500,000,000 a year. This sum is equal to 2½ per cent. on £20,000,000,000 which may be the total sum of the national wealth. The amount is a little problematical; it has been valued at £15,000,000,000 and at £25,000,000,000. If you take the figure of £20,000,000,000, 2½ per cent. is an enormous amount to support. It is over 12½per cent. of the national income. It is an addition of nearly £1 a week to the wages of 10,000,000 families. It is colossal. The hon. and learned Member for Nottingham (Mr. O'Connor) yesterday demonstrated how direct taxation has gone far beyond saturation point; how the tide is turning and how the law of diminishing returns is endangering the future stability of the State, and when we hear hon. Gentlemen opposite expounding programmes which would increase taxation by £400,000,000 or £500,000,000 a year, it is absolutely necessary to warn people of the folly and dangers of such unpractical proposals.
The difference between the proposals of the Chancellor of the Exchequer and the proposals of a Socialist Chancellor of the Exchequer of the sort I have in dicated is the difference between peaceful pickpocketing and highway robbery. I maintain that millionaires—and unfortunately I am not one of them—are the, best form of investment to any country. Their money is employed in the safest channels. They receive the lowest interest and they pay the highest incidence of taxation. To-day, with the best forms of investment paying less than 3 per cent., the Government take more than half—60 per cent.—from these fortunate individuals, and it should be the Government's object to perpetuate this sort of income rather than to cut it down and to give diminishing returns. The remarkable thing is the small margin between the earned income of all classes and the amount freely spent by the community, and although it has been possible for smaller investors to save hundreds of millions during the last few years, the resources of the richer people have been seriously depleted, and, if this continues, the incidence of taxation on the smaller investors will perforce have to be increased. That is a thing that small people should think about, and it is a very serious menace. The law of diminishing returns cannot be got away from, any more than the law of supply
and demand, try as much as you like. To-day earnings of all classes, plus the cost of social services, must amount to over 90 per cent. of the income of the country, leaving only 10 per cent. to pay the remaining taxation, save for future development, and the expense of living.
The hon. and learned Member for Nottingham suggested that the Government should encourage a policy of expansion. I believe that until we are in a position to finance a large migration policy we shall do no good at all, or at any rate make very slow progress, in reducing unemployment. Those who have read Professor Stephen Leacock's "Economic Prosperity in the British Empire" and other books realise the enormous territories which are awaiting population. I hope the Government will take the opportunity afforded by the visit of representatives of various Governments to see if some start can be made with a vast scheme of this sort. This is not the occasion to go into details. I will only say one thing. I think some such scheme might be started this year as a sort of Jubilee memorial in honour of Their Majesties. I have never seen any scheme which did anything more than outline what could be done, and in no case have I seen a satisfactory method of financing such a scheme. It could only be successfully accomplished on the basis of help and good will of every member of the community. I have dreamed of a scheme embracing 100,000 families a year—families of four people —which in five years would dispose of 2,000,000 people from the labour market; 1,000,000 young people would never come on to the labour market. I visualise the realisation of this scheme by some sort of national income loan, which would he subscribed to by all on the basis of 2— per cent. of the national income, which would give us about £100,000,000 a year, sufficient to provide a £1,000 capital for each family who left these shores. Such a movement would assist exports, our shipping, our friends overseas would provide territories; railways would be built and new communities established overseas. I believe that some such scheme might be considered. It may be that everybody would not wish to subscribe, but as there would be a free market, and as there is a demand for investments
bringing in 3 per cent. those who could not afford to hold their loans could sell out. I think that people would sooner subscribe to something of that sort than pay an extra 6d. on the Income Tax to maintain people for doing nothing. I have tried hard to strike no discordant note. It has been an ordeal to get up, but it will be no ordeal to sit down. I thank the House for their patience in listening to my first and humble contribution to the debates of this House.

5.16 p.m.

Mr. BANFIELD: It is with a great deal of personal pleasure that I find it falls to my lot to congratulate the hon. Member on his maiden speech. We have known each other for some time before either of us entered the House, and we have helped each other at different times. I hope that we may get the benefit of my hon. Friend's expert advice in the future and that it will be possible for me to answer some of the arguments he will put forward. The hon. Member for East Edinburgh (Mr. D. Mason) gave us a very eloquent speech on the advantages of the gold standard, and suggested that the present position of our currency has led to a reduction in the purchasing power of the workers. I disagree with him entirely. I have not found any such thing in the course of my experience, and from my own personal knowledge—I go into thousands of working-class homes during the course of the year—I have no reason to believe that the purchasing power of the people in the home market has depreciated to any extent.

Mr. D. MASON: What I said was that sterling prices had not risen, but that if we had been on the gold standard we should have had much lower prices. That was my point. If we had been on gold, we should have increased the purchasing power of wages. It is true that sterling prices have not risen, but we have not had the advantages which would have accrued if we had been on a gold standard.

Mr. BANFIELD: One must always speak from practical experience. We may be wrong in our assumption, but we believe that the lowering of the wages of the workers in 1924–26 and the general strike of 1926 was due in the main to the severe inflation necessary to maintain the gold standard. We may be
wrong, but that is the opinion which many of us hold. We are all agreed on the necessity of stabilising currency, but it would be a pity if the hon. Member were so wedded to gold that he was unable to adopt any other alternative. Time Chancellor of the Exchequer has received a whole chorus, a beauty chorus, of congratulations on his speech. Everyone says, "I want to congratulate the Chancellor of the Exchequer on the lucid way in which he has put the case," and all the rest of it. I feel that in speaking on the Budget I am in the position of a man who is attacking a feather bed; you can hit as hard as you like, but you cannot find out just where to get the blow home; it gives way, there is no stability, no background.
The Chancellor of the Exchequer commenced his speech on a high note of optimism. He painted a glowing picture, which was perhaps justified from the Government's point of view. He pointed to a reduction in unemployment, to more exports, to the confidence in the country, and anyone who did not know the internal condition of this country and did not know the position of millions of working people would have believed that all was for the best in the best possible world. That is not the position by any means. All is not well. I can understand the position of the Chancellor of the Ex-chequer. He feels that he has good grounds for congratulation on the fact that he has been able to balance his Budget, but he has done so by one means and another, taking a little from the Road Fund and managing by various means to present a balanced statement. In my own view, this is simply a hand-to-mouth Budget. This year, all right; but we must close our eyes and open our mouths and see what the Lord will send us next time. I was struck by the speech of the hon. and learned Member for Central Nottingham (Mr. O'Connor) yesterday. The Financial Secretary to the Treasury made no attempt to reply to it. He only alluded to it in an indirect way. Is there no answer to that speech? In my opinion, it commands the attention and respect of all hon. Members, and of everyone who wishes his country well. This is what the hon. and learned Member said:
We have no sinking fund; we have the highest direct taxation that we have ever had in peace-time in this country, with the excepion of last year, when it was 6d. more
we have a diminishing yield from every single form of direct taxation; we have an increasing expenditure upon every single form of social service with the exception only of the automatically diminishing War pensions; and 2,150,000 of our people are unemployed at the present time. Taking a long view, I believe that, without the most radical treatment in the world, the structure of our society cannot stand what is happening now. I believe that something has got to go.
Later on, he said:
I feel that the time has come when we have to recognise that we cannot keep the structure under Which we live going without expansion, and we have to do something to mortgage the future. If the future cannot look after itself, then the edifice is going to crash anyhow.—[OFICIAL REPORT. 16th April, 1935; cols. 1754 and 1757, Vol. 300.]
I put it to the Chancellor of the Exchequer that this is a statement which calls for an answer. It is a statement of fact, the truth, which is apparent to everyone. It is sometimes assumed by hon. Members opposite that we on these benches take a rather narrow view of our own country and are not so much concerned with its well-being as hon. Members of different political views. We wish our country well, and have every reason for doing so. We think it is the duty of the Government to have a, long-range policy. We are not yet clear of another crisis; no one knows when it may be upon us. Although I do not agree with the hon. Member for East Edinburgh, yet he was right when he said that so long as the currencies of the world remained unstabilised, fluid, changeable, there could be no possible hope of any permanent return to prosperity.
The Chancellor of the Exchequer, after his optimistic opening remarks, forgot that with all the good will in the world he is not able to do very much for the great mass of our people. I realise that within the limitations of the Budget he has been able to do all that could be expected. It is useless to say that he could have done more with the funds at his disposal, but, if anyone argues that the Budget is likely to bring hope and encouragement to the great bulk of our people, they are sadly mistaken. Take a constituency like my own, a purely working-class area, with only a, small number of Income Tax payers, with unemployment at 23 per cent. in the largest town, and with wages down to
37s. 6d. to two guineas per weak. What hope does the Budget bring to these men and women? What hope does it bring to those who have been unemployed the longest, to the man in the home who has been unemployed for six months or nine months? The Budget offers nothing to him. I know that the Chancellor of the Exchequer has said that he wants to restore the prosperity of the country as far as he can and to see that those who suffered in 1931 should be the first to receive benefit now. So far as the unemployed who have been out the longest are concerned, those who are on, transitional payment and subject to the means test, their position under the Budget is no different; nothing whatever is done for them. It has been said that you should not look a gift horse in the mouth, that the concession to Income Tax payers, the restoration of the cuts, the penny off the Entertainments Duty, are all to the good, but what I want to emphasise is that they apply to a comparatively small number of our people and that there are a much larger number who are not affected in any way by the Budget.
There is another point I want to raise, and that is the question of pensions for old people. It is a remarkable thing that the only record I have had from my constituency in connection with this Budget has been from old people asking whether something is not to be done for them. They put it to me, as they have done over and over again, that a 10s. pension at 65 years of age, with a rent of 5s., Gs., 7s. or 8s., brings them nearly to the starvation level when two old people between them have only £1 a week. They ask whether it is not possible for the Chancellor to do something for them. Hon. Members have called attention to the cost of the social services, but I am firmly of opinion that sooner or later there must be some reorganisation of unemployment relief and pensions, and that it will be found a good business proposition to take old people out of industry altogether. We have 2,250,000 unemployed in. a period which has been described as 80 per cent. prosperity, and there are 200,000 old age pensioners over 65 years of age who have to go to the Poor Law for further relief, while many hundreds of thousands of them have to continue at work simply
because they have not sufficient to enable them to retire. I make a plea which I think will get stronger and stronger, that at least some attempt should be made to inquire into the whole question of old age pensions, in order to see whether they cannot be put upon a far better basis. I am satisfied that it is possible. One of the letters I had this morning said that the pensioners were prepared to pay another ld. or 2d. a week towards old age pensions provided they could get a pension on which they could live and not have to exist in a state of semi-starvation. The Chancellor seems to have felt that nothing could be done.
There is a further point. In his Budget statement the Chancellor made only a passing reference to the question of the depressed areas. It is obvious that some money must be found if anything is to be done for those areas. The hon. and learned Member for Central Nottingham yesterday declared himself in favour of an expansionist policy. He said that all the talk of economy had failed, that it was impossible to exercise economy in the way of cuts and that kind of thing, and that the only policy left to us was a policy of expansion. Does that mean the provision of £500,000,000 for public works, by which something real is to be done for the depressed areas? Hon. Members often complain about the cost of the dole. I complain too of £120,000,000 or £130,000,000 a year being given to people for doing nothing. I want to see those people in work. I believe it would be an economy to spend money in order to find them work, and it ought not to be beyond the wit of the Government to find work that would be valuable and of national importance. Money could be spent on work which would return itself threefold to the country as a whole. I would rather that our money was spent in that direction than that we should see, as I see in my constituency, young men standing at street corners eating their hearts out, asking for a job and unable to get it, and dropping lower and lower in the scale day after day. Surely these are problems to which even the Chancellor of the Exchequer should devote some portion of his Budget speech.
This problem of unemployment, of people wanting work and being unable to get is and being a waste to the nation is the vital problem, the bread and butter
problem. We have a perfect right to say that those people who have been out of employment the longest want more than those who have been out of work for only two or three weeks. The Chancellor might have devoted some of his money to making provision for that class of men. They are not worse citizens because they have been out of work longer than the others. They want to do their work as citizens, but if the capitalist system cannot find them work surely they are not to be punished because unfortunately they have been unemployed longer than someone else. Their position should be made easier.
I hope that the Chancellor of the Exchequer will, in the near future, in conjunction with the Ministry of Labour, take into consideration the position of these people. When the Minister of Labour brings in his new regulations to deal with Part II of the Unemployment Act, if he does his duty he will have to ask the Chancellor for more money. I am satisfied that the household means test will have to go, and that some new way of dealing with the problem will have to be found. Not only on the Labour benches but in every part of the House among Members who represent industrial areas, there is an admission that the household means test is unfair, cruel, and should be swept away, and I hope that the Chancellor and the Minister of Labour together, when they come to deal with the matter, will realise that money roust be found so that these men and women and their children shall have at any rate the necessaries of life and some chance of getting back into industry. Nothing could be worse than to say that these people are to be put into a separate category. That is what seems likely. The Chancellor has recognised the claims of every one who suffered from cuts in 1931. The only people he has not recognised are those who have been unemployed the longest and want work the most. I cannot understand why the claims of these men should be passed by.
I am sure that for the large majority of our people this Budget will be a disappointment. It is a humdrum Budget. There is nothing startling about it. The restoration of some part of the taxation imposed upon the smaller income taxpayers in 1931 was long overdue. They still have a very heavy burden to carry. I think that their position is nearly as
bad as that of the manual workers. I have always a great deal of sympathy with them. Apart from that, and the restoration of the cuts to the Civil Service, which also was an act of restoration long overdue, there is nothing in the Budget which is going to make the British public enthusiastic.
I am full of anxiety as to the future. I cannot see anything in the Budget which justifies the hopes and the confidence of the Chancellor. I believe that we are still living on the verge of another crisis. There are hon. Members in this House, bankers and experts, who ought to know far better than an individual like myself. I put it to them as I put it to the Chancellor that we are a long way yet from being out of the wood. Our export trade is not coming back. Although it shows signs of some increase compared with 1929, there is a lot of leeway to be made up. I hope the Government will realise that this country can flourish ultimately only by its exports. Foreign markets are our greatest asset. These, the shipping trade and shipbuilding, are the things that have made this country what it is. The Government will have to realise that they cannot bring prosperity back to Lancashire without once again opening the foreign markets.
Because I see no prospect of these things coming out of the Budget, I say that the Budget is not one which raises hopes in the minds of thinking men and women, but rather makes them feel insecure and full of depression. It is all very well for hon. Members to cheer the Chancellor's statement. It is all right at the moment; it carries us on during the next few months. It is very satisfactory to know that so far so good; but in my opinion it is necessary for the Chancellor and for the Government to take a longer view. It is necessary for them to justify, if they can, the mandate which they were given in 1931 to re-organise the finances of the country and to put them on a solid basis. With all respect I submit that that has not been done and that the Budget does not do it. If the Government lives long enough to introduce another Budget, I hope we may have one which will take that long view, which will attempt to deal with questions as I see them, questions of expansion, questions of exports, questions of our foreign trade. If we can get that kind of thing
into the mind and heart of the Chancellor, the Government should do their best to take a long view which will put the country on the way to the prosperity which we all want to see.

5.43 p.m.

Captain HAROLD BALFOUR: In offering congratulations to the Chancellor of the Exchequer, I do so with particular pleasure on this occasion in view of the new principle which my right hon. Friend admitted in relation to the Oil Duty. The fuel oil tax is to he charged according to use, according to a particular use. So when the Finance Bill comes along and there is that hardy annual, an Amendment that all petrol used for aviation shall be exempt from duty, I hope to hear the statement that the Amendment is accepted, and that the old excuse which we have had from the Treasury Bench, that matters of administration and differentiation prevent its acceptance, will not carry weight this year. It seems to me that the most significant phrase in the Chancellor's speech was when he warned the House that our trade recovery might well be jeopardised by an overshadowed foreign situation. It seems to me, and I believe it seems to a great number of thinking citizens throughout the country, that indeed we are living on a desperately small margin between the maximum taxable capacity of the country and the ordinary normal revenue requirements.
On all sides that point has been stressed. It was stressed by the hon. Member who spoke last and by the hon. and learned Member for Central Nottingham (Mr. O'Connor). In the old days—the good old days as we are inclined to regard them—when the Income Tax was Is. in the £there was a great reserve of financial resources in the country which could be called upon easily in the event of need arising for some emergency expenditure such as an increase in the defence forces or a need for fresh revenue as the result of some industrial depression. Now, year after year, we are just managing to get along and all of us, in common with the Chancellor of the Exchequer, are pondering on the prospect with which the country will be faced in the event of some depression arising from outside sources over which we have no control.
The hon. and learned Member for Central Nottingham said yesterday that economy was as dead as the dodo, that it was no longer talked about. Our social services have risen from £36,000,000 in 1900 to £490,000,000 in 1932—a truly colossal item.
I am not decrying social services at all. I think it is a remarkable fact that the capitalist system is able to support social services which the Socialist system has not been able to afford in any country in which it has so far been tried. But I say that the prospect is bleak for the taxpayers as regards the hope of any considerable reliefs. The hon. and learned Member for Central Nottingham suggested the remedy of inflation as the hope for the future. The Chancellor of the Exchequer must be torn between the hon. Member for East Edinburgh (Mr. D. Mason) on the one side saying "Come this way," and on the other side the hon. and learned Member for Central Nottingham saying "Follow my path." But there is this common ground in the various analyses that we have had of the present situation—that our revenue is not expanding, and that our expenditure is mounting. What then are the prospects for the future? I do not believe in the gloomy prophecies of the hon. and learned Member for Central Nottingham because it seemed to me that he presupposed that the country was not getting richer all the time. He deplored the passing of the millionaire, but in deploring the one individual who has passed and whose £1,000,000 has disappeared, he forgot that the place of that individual was probably taken by 2,000 citizens each with £500. There is a revolution going on in our midst, in the present redistribution of wealth. I suggest to the hon. and learned Member that he Ought not to take comfort from modern books on statistics or law. Let him look rather to history, and he will find that situations such as the present have been met time after time. I have here what Lord Macaulay wrote in 1830 about Southey's "Colloquies on the Progress and Prospects of Society."
To almost all men the state of things under which they have been used to live seems to be the necessary state of things. We have heard it said that five per cent. is the natural interest of money; that twelve is the natural number of a jury; that forty shillings is the natural qualification of a county voter. Hence it is
that though in every age everybody knows that up to his own time progressive improvement has been taking place, nobody seems to reckon on any improvement during the next generation.
Then, in regard to finance:
A million a year will beggar us' said the patriots of 1640. 'Two millions a year will grind the country to powder,' was the cry in 1660. 'Six millions a year and a. debt of fifty millions,' exclaimed Swift. 'The high allies have been the ruin of us.' 'A hundred and forty millions of debt!' said Junius, 'well may we say that we owe Lord Chatham more than we shall ever pay if we owe him such a load as this.' 'Two hundred and forty millions of debt,' cried all the statesmen of 1783 in chorus 'What abilities or what economy on the part of a minister can save a country so burdened?'…On what principle is it that, when we see nothing but improvement behind us, we are to expect nothing but detioration before us?
On what principle is it that to-day we can see nothing but improvement behind us and expect nothing but depression and worse times to be in front of us. I believe firmly that apart from all the acts of misgovernment and good government of our rulers, this country is becoming richer and richer. Now and then there has been a general stoppage. Sometimes there is a short retrogression, but, as to the general tendency, there can be no doubt. A single breaker may recede, but the tide is coming in all the time, and we can look in the future to a richer country under either a National Government or it may be a Socialist Government. But I believe that the gap between normal revenue and expenditure which is what is worrying us at the present time, must be bridged. If we can bridge it during the next few years and if we suffer no upset such as would arise from foreign disturbance, then I believe that the country will continue to grow richer. I believe that at some time in the future the hon. and learned Member for Central Nottingham and his friends will find their gloomy prophecies proved wrong, and that the richness of our country, in spite of its politics and in spite of its politicians, will enable us in our social structure, to give benefits which will make the increase from £30,000,000 to £490,000,000 since 1900 look small.

5.50 p.m.

Sir ASSHETON POWNALL: The hon. Member for Caerphilly (Mr. M. Jones) yesterday used a phrase which struck me as being unfortunate. Speaking about
the American debt he referred to "unilateral repudiation." I could not help feeling as he said it that it was a very unilateral sort of statement. If anything in this world has been multilateral, it has been the habit of repudiation with regard to war debts. Anyone who looks at the financial papers will see, beginning with Russia, and going right through Europe, that repudiation is the one thing which until the events of 18 months ago, we had not achieved. Speaking, as the hon. Member does, from the Front Opposition Bench and as one who may well occupy a responsible position in the dim and distant future when the party opposite next assumes power, I think he was to some extent guilty of that national habit of self-disparagement to which the Chancellor of the Exchequer alluded in his Budget speech.
I do not wish to go into the question of the American Debt beyond pointing out that apart from the fact that the thousands of millions of pounds which we advanced are not being repaid, we are not receiving any interest upon those sums. On the other hand the United States by their trade policy have put up immensely high tariffs, and there is further the fact that, with France, they accumulated virtually all the gold in the. World, and made it impossible for us, even if we did receive the sums due to us from foreign countries, to make payments to them. A friend of mine was in America last year interviewing financial experts, and one man said to him: "Of course we do not want gold from you and in any case we understand you have not got it. We are not prepared to take your goods—we put up our tariffs in order to keep them out. But why cannot you send us a cheque?" While that lack of clear thinking still. continues on the other side of the Atlantic, statements like those of the hon. Member for Caerphilly tend to show this country in a light, which I for one do not agree with, in relation to the United States.

Mr. MORGAN JONES: Does the hon. Gentleman deny that there has been unilateral repudiation?

Sir A. POWNALL: I do not deny unilateral repudiation but I suggest that it is easy to tell the truth, the whole truth, and nothing but the truth, and that the hon. Member on this occasion did not tell the whole truth.

Mr. J. JONES: Are you going to tell it for him.

Sir A. POWNALL: Turning to the Budget as a whole I think there has been a remarkable chorus of commendation for it. I do not remember a Budget which has been so well received by all sections of the Press. I turned with interest yesterday morning to the paper which I thought would be most likely to criticise the Government, the Labour Party's Paper, and I found that the adjective applied to the Budget was "vote-catching," which I take to be merely a euphemism for "popular." Anything which can be described as vote-catching must be popular, and when I heard denunciations of the Budget—of which there were not many—from the benches opposite yesterday I said to myself "Anyhow it is vote-catching and presumably it must appeal to large sections of the population." Looking back on the emergency Budget of September 1931, one cannot help feeling the immense change that has been wrought in 3½ years, and wishing that one could have foreseen that the burden, which then sat so heavily on all of us, would have been lifted as it has been in that period.
I specially welcome the extra allowance which has been made to the so-called black-coated workers. It so happens that there are large numbers of them in my own constituency and I have been given the actual family budgets of a number of households with incomes of between £300 and £400 a year. These show that, allowing for the reduction in allowances and the increase in taxation, people of this class were penalised to an extent which I do not think was experienced by any other class in the community in so far as one can compare people with different incomes. The black-coated workers were very hard hit, and for the first two years at any rate they bore the burden uncomplainingly. When things began to get better they, naturally, went to their Member of Parliament with actual figures showing reductions of 10 per cent. and in some cases of 15 per cent. in the net incomes which they were receiving. They are undoubtedly entitled to the remission which they are now getting and I hope that in the future they will receive even more consideration.
There is a rather important fact which is generally ignored by hon. Members
opposite when they speak of the Government not having done anything in this Budget. Apart from the restoration of cuts and allowances the Government have by creating confidence abroad in our financial arrangements, been able to bring our cost of living figure down to only 39 points above the pre-War level. The figure for 1931 was approximately 51 to 52 points. In other words we have reduced our cost of living by close on 10 per cent., a factor which is of immense value to all classes in the community and especially to those on the lower scales of income. They get the benefit more than any other class. When the Chancellor gave us those interesting and rather amusing figures on Monday with regard to extra expenditure on tea, tobacco and beer, 1 felt that it was owing in part to the fall in the general cost of living that that extra pocket money, if one may so describe it, had become available for all classes of the community and especially those into whose budgets tobacco, tea and beer enter to any extent. It is also a remarkable thing that while in the four or five countries which still adhere to gold the pound is only worth 12s. we have been able to achieve that very remarkable reduction in the cost of living figure.
The Chancellor of the Exchequer said he thought we had got about 80 per cent. on the way towards restoration. I am fond of simple sums, and, although hon. Members opposite think there will be a General Election this year, I work it out that we are now roughly four-fifths of the way through the present Parliament. In other words, we have about 20 per cent. of the time allotted to us left in which to achieve the remaining 20 per cent. of restoration which we all desire. What I am anxious about is that when, in the course of the next year or 15 months, we achieve this remaining 20 per cent. of restoration, we shall not be faced with something of the character prophesied by an hon. and learned Member opposite, namely, a financial crisis, and a situation in which one day at the polls might undo in the main the good work of the previous four and a half years. That is my main anxiety. Hon. Members opposite say they have anxieties with regard to the future. Frankly, my anxiety is lest, at a certain date a year or 14 months from now, we should by
action taken by our 29,000,000 electors, get back to the conditions of 1934 and find ourselves again with 100 points of restoration to make in subsequent years.

6.1 p.m.

Mr. BUCHANAN: I have spoken on almost every subject in the House, but rise to-day to take part for the first time in a Budget Debate. I admit that I do not think it will be denied that the Budget is a popular Budget. I do not see anything wrong if it is a vote-catching Budget, for, after all, every party is entitled to make its Budget and policy for the purpose of catching as many votes as possible. For my part, I have a great feeling of relief, not because of anything that the Budget accomplishes, but because it does not do a number of things that I am always afraid Conservatives will do when they are in office. I feared most, for instance, concessions to Income Tax payers in the higher scale, and concessions on Death Duties and Super-tax. If I have any congratulations to offer for the Budget, it is not for anything that it accomplishes, but because the Chancellor of the Exchequer has not given way to clamour for the reduction of these taxes.
Much has been said about the restoration of cuts to various people. I hope I shall not appear as if I were crying for crying's sake if I make the case that the unemployed have not had their cuts restored. It should be borne in mind that the unemployed have had three cuts forced on them, and that those cuts were not imposed by unemployment insurance legislation. One could have understood the Government, introducing a Bill to remodel unemployment insurance and to make certain inroads on what might be termed the conditions with the unemployed, but they have not done that. The three cuts that have been imposed were part and parcel of economy measures. Those of us who were in the House a few years ago can remember that the Blanesburgh Commission gave the unemployed a certain number of weeks of unemployment standard benefit; in other words, an unemployed person was guaranteed standard benefit if he had 30 contributions in two years, so that his period of standard benefit, roughly, ran for a year and four months in every two years. The unemployed suffered one of the most severe cuts of all, more severe
in some respects than the actual cut in the amount, when the standard benefit was reduced from 16 months to six months.
The second cut was made by what is called the means test, and the third cut was made in the amount paid to the unemployed. The only cut that has been restored is that in the amount. The means test remains, and the biggest cut of all, that which was made in the period of standard benefit, remains also. In these days when groups, parties and interests are constantly urging claims on the Chancellor of the Exchequer, the right hon. Gentleman ought to remember that the unemployed still suffer from two of their cuts and that they have a prior claim to restoration. Certain of the restorations of cuts, particularly to the higher salaries of certain people, could well have waited until some portion of the cuts to the unemployed had been restored. I welcome the restoration of the cuts to the lower-paid civil servants and Government employés, but I am not to be taken as agreeing to restoration to the higher-paid officials. Everybody above the £400 or £500 level could have waited until the unemployed had had their cuts fully restored.
The hon. Member for Caerphilly (Mr. Morgan Jones) has been subject to a good deal of criticism for his comments on the American debt. Let us be frank about it. We are not paying the American debt. We hear all the standard excuses for not paying. We hear the excuse that other countries are not paying their debts to us, but I have yet to learn that that is a, reason for our not paying our debts. it is an excuse, but not a reason. The real reason is that we do not feel ourselves in a position to pay, so we are not paying. I must confess that I have no desire to press the Government to pay if they feel like allowing the debt to drift. That is, in part, repudiation of the debt. You may toss words about and coin phrases as much as you will, but it comes to that in the end. In the meantime, we have our internal debt amounting to close on £7,000,000,000. People invest in that debt in the same way as they invest in property or business. When they put their money in business and property, so much goes towards depreciation. In the case
of investment in the National Debt, however, there is no depreciation of the original capital. It remains the same and, unlike other investments, it remains a fixed amount. The time has come for the Government, in view of the fact that it can treat the American debt with impunity and say they are not going to pay, to start, not as the hon. Member for Caerphilly said, the repayment of the debt—

Mr. MORGAN JONES: I specifically said that I was not urging that.

Mr. BUCHANAN: I re-read the hon. Member's speech because I was under the impression that that was what he said, but I gladly accept his assurance. The hon. Member said that the debt would have to be faced some time. I think that the time has come now when we ought to depreciate our internal debt in the same way as we depreciate property and other investments. We cannot go on carrying a fixed charge on permanent debt. You can call it repudiation or cancellation, if you like. The Labour party in the old days used to have what they called the capital levy, which was in effect depreciation of the debt. The time has arrived when the Government ought to start on a policy, not of repayment of the debt, but of depreciation of the debt in the same way as any other property is depreciated. I strongly object, while you allow the unemployed to remain subject to cuts, that you should allow the rentier and the investor in Government stocks to keep his capital as a fixed security. Even allowing for the recent reduction in interest, for cheap money, and for the cost of living, which at one time stood at 150 and now stands at 39, the income of the investor in Government stock has appreciated. He, almost alone of all the community, is not bearing any share in what are called the common sacrifices. I cannot see a Socialist or any other Government undertaking the task of what is popularly called the reconstruction of our civilisation without some form of direct repudiation, at least of part, if not the whole, of our great debt.
I pass to a matter which my hon. Friend the Member for Bridgeton (Mr. Maxton) has asked me to raise, although I do not know whether the Chancellor will agree that this is the proper time to raise it
In the "Daily Herald" this morning the question of Newfoundland is raised. This Government guaranteed a loan to that country, and I want to ask the Chancellor what can be done in this Budget to relieve the poverty of the people there. It may be said that the story in the paper is exaggerated, but it is a story of tragedy that is almost unparalleled. It may be said that it is sensationalism, but nevertheless a terrible picture is painted. I have a great regard for the Chancellor —not for his Budget, but for his character. Of all men in public life he has a character which should be an example to us, and seeing that we are dealing with money and with human souls I would beg him to pay some attention to the case of the people of Newfoundland, who are bound to the bondholders, to those who can by some means or another look after themselves. Surely in his Budget the Chancellor is not going to deal merely with the debts we owe and with the debts that are owed to us, with a balance here and an asset there. What is he going to do to deal with the terrible poverty problem in Newfoundland? Can he make some provision in the forthcoming Budget to see that the poor people there will be as well treated as the bondholders? I have raised the question of Newfoundland at the earliest opportunity because we must not forget that Newfoundland's problem was as much as a financial problem as any other kind of problem. It was through finance that the crisis was alleged to have come, and they were financial steps that we took to patch up the situation, and I ask the Chancellor whether he will not consider making some financial adjustment.
At the beginning of my speech I said that the unemployed had not had their cuts restored, and there is another cut to which the Chancellor ought to turn his attention. He may say that it does not concern his Department, but it is really a financial issue which is outside the Department immediately concerned. I refer to the position of the sick, old age pensioners and widows. Here may I say a word to the members of the Labour party, I hope in no supercritical spirit. Members of their party are now advocating a pension of £1 a week at 60 years of age. I do not depreciate that propaganda, but I would point out that £1
a week at 60 is a vast amount in the eyes of a great many people. It is double the present pension, and it would mean £2 a week to a man and wife. It is a great thing to promise them, it is a great hope to hold out to them, and I only want to say to the members of the Labour party, "Do not hold out the promise unless you mean to fulfil it." I have a great regard for my colleagues in the Labour party, and more particularly have I a great regard for the personal character and capacity of their leader—I think for his capacity as much as anything, and I wish that I had not heard men in Glasgow the other day promising pensions on the scale I have mentioned. With all my love of politics and politicians, I would sooner go back to selling papers in the streets of Glasgow than seek to gain political power with promises which I could not carry out. I hope I shall not get the reply, "It is only being said by back benchers, and not by leaders." Votes are being gathered by it.
I am not as ambitious as some people. I would rather promise shillings that I intended to give than pounds that I did not. I have a more moderate plea to make. What shocks me is the number of people who do not get even the miserable pension we now pay. When we fought the Renfrew by-election round about 1930 the present Attorney-General said he could guarantee that when the Conservatives took office again—or at least he held out the hope—they were going to introduce a Measure of social insurance which would embrace practically every section of the community. That was a promise held out by one who had been a member of the old Conservative Government and is now a member of the present Conservative Government. One of the tragedies at the moment is not merely the amount of the pension but the large number of people who are not getting the pension. There is the case of the man who goes to Canada and leaves his wife at home here-he goes away to relieve the country of a burden. We have heard the plea, "Let us have more emigration," and there are people who have emigrated, the best type of people, people with the spirit of adventure and of courage and character. They go out with the idea of saving money, but times have become bad in Canada and Australia and America and they remain
out there for years. The wife stays at home, and they send money to keep her; she does not have to seek Poor Law assistance. But if the man dies out there and the widow applies for a pension she is told, "You cannot get it, your husband was not within insurance." What kind of basis is that for a pension scheme? I do not know what to say when the women come to me to complain. I can never answer them.
Then there is the case of the little man in business and his old age pension. Let us be frank about his position in these days. I am a keen co-operator, and I had intended to ask whether the Government were not going to do anything to repair the damage they did by the attack on co-operative societies 12 months ago. I think the Conservatives were mad to make that attack on co-operators. Big business is the coming thing. The old days of men owning little businesses are passing. Woolworth's, the co-operative stores and the combines are here. The only way in which small men can own capital is by a share in a co-oeprative society, and yet the Government attack about the only way in which working people can own capital now. But with regard to the question of pensions and the case of the people who start small businesses only to find they are being smashed by the bigger forces in business to-day. If such a man dies his wife can get no pension. He himself cannot get a pension at 65, he must wait until he is 70. I ask the Chancellor whether nothing can be done in this Budget to ease the position of the 70-year-old pensioner.
The position is that at 70 a man can get a pension of 10s. a week, but if he is still earning more than 10s. a week his pension is reduced on a sliding scale until, when his income reaches 18s., he gets only a shilling or two. If perchance his income is derived from an investment—say in a co-operative society —it must not exceed £49 10s. to get only 2s. How is that income of 249 10s. calculated? Suppose that man has got £500 invested. The Government do not calculate what that will bring him in on a 3 or 3½ per cent. basis, but they take it on an annuity-value basis and calculate the interest on his £500 at 10 per cent. That is what they do with a person of 70. I am amazed at the cheek, almost, of the Conservatives. They prate here about being the defenders of people
of that type, but they do everything to attack them—the thrifty man, the saving man, the man who has worked in the mine or the factory and who has put by his savings. When he gets to 70, if he is outside the insurance field, they do not calculate his savings as a sum producing income at the rate of 3½ per cent., but on a 10 per cent. annuity basis. Is anything going to be done in this Budget for that type of man? Even if he is given 10s., as I say sometimes on the platform, that is no more than a wealthy man gives a waiter.
Another thing of which I would remind the Chancellor of the Exchequer is that some time ago the Minister of Health announced that be intended to introduce a Measure before the end of this year to deal with the problem of old age pensioners who had lapsed from health insurance. That will be a good or a bad Measure according to the amount of money which can be found to finance it. We have criticised the Minister of Labour in connection with unemployment insurance, but he gives us a good scheme or a bad scheme according to the amount of money which he has to spend. If we give him more money he will give us a better scheme. So, in this Budget, we shall be deciding what kind of Measure the Minister of Health will be able to introduce. He will have an actuarial survey and on the result of that and the amount of money which is available he wlil calculate what can be done. I make no extravagant claims on the Chancellor. He is the Chancellor of a Conservative Government. He is a Chancellor who has not promised to do some of the things that others have promised to do, but the Government have made the claim that they are restoring cuts and restoring prosperity, and there can be no more urgent task and no more humane task than restoring to the sick, to the aged and to the widow—not prosperity, but at least a modicum of comfort for the end of their days.

6.30 p.m.

Mr. FRANK CLARKE: As representing one of the largest working class divisions, I would thank the Chancellor for a wonderful recovery in our part of the country. Three years ago we had an unemployment problem of between 5,000 and 6,000 but, as a result of the policy
of the Government, it is down to 2,000. We have had no less than six fresh industries come into the division, in spite of one of the largest armament factories closing down just after the Government came into power, and an influx of nearly 20,000 extra people, very largely from the slums of London as well as from other parts of the country. We feel that this recovery is going on steadily all the time. Many of the larger factories that were in a very depressed state are employing as many as 500 more men than at this time last year. As a result, we feel a confidence in the Government's financial policy very considerably in our division. The Budget has been hailed by the working people as a poor man's Budget. We thank the Chancellor for what he has done for our division.
I rose to refer to the question of the soya bean. We have a large oil factory in our division which is going to be very much affected by the new duty. We know that it means unemployment and a higher price for oil cake. The soya bean, I understand—I am not an expert on the subject—gives only about 16 per cent. of oil but a large percentage of cake, and if factories were to use palm kernel and other raw material, they would make too much oil and not sufficient cake. They are therefore concerned about this matter, and are very mystified as to why the duty was put on in 1931, taken off and now introduced again. I ask the Chancellor to look at the situation once more. No doubt other hon. Members who are more qualified than I am, will speak on this point, and will be able to put the case more strongly.

6.33 p.m.

Mr. ALBERY: The hon. Member for Gorbals (Mr. Buchanan) interested the Committee, as he always does. His speeches are very often moving, but, on the other hand, not always logical. He desires that we should depreciate the loans taken up by private individuals, but he is very anxious, on the other hand, about the interests of those who have invested in co-operative societies. I do not know why he should be so anxious that the latter should get full value while those who lend to the State should have a depreciated security. I imagine that if one of his friends came to him and asked him to lend £5, he would lend it if he had the money to spare, but I am
not quite sure that he would lend it if he were informed that the money would depreciate at the rate of a 1s. per month until it was paid off.
The hon. Member for Limehouse (Mr. Attlee) referred to the Budget, much to my surprise, as a precarious Budget. That is not the impression the Budget created upon me, except that everything in the world is, unfortunately, precarious. When the Chancellor, in his report on last year's finances, is able to show that he has come through the year with a surplus, and not only that, but that some £20,000,000 has been paid into the sinking fund for the redemption of debt, and when we know that his estimates are framed in the same cautious manner—some of us think too cautiously—I am at a loss to understand the grounds on which the hon. Member for Limehouse could suggest that this is a precarious Budget.
The Debate has ranged over many subjects, and that prompts me to refer to a matter to which I have given a good deal of consideration lately, and which arises also from a remark made by the Chancellor of the Exchequer during his Budget speech, when he estimated that we had returned to something like 80 per cent. of normal prosperity. We may have done so, but, unfortunately, we still have over 2,000,000 people unemployed in this country. I am tempted to think that, if you take into account the difference which machinery has made to output, the increased amount of work which women do which was formerly done by men, add the fact that practically nobody is emigrating and you look at the condition of the industries which are not depressed, one might reasonably estimate that we have returned to something like 100 per cent. prosperity in most of the trades of the country.
The 20 per cent. which is not prosperous to-day arises, for the most part, in industries which are still depressed. Some of them, unfortunately, are never likely to recover fully. Taking that fact into account, I often think that we have to face up to the unemployment problem in an entirely different manner. The Socialists advance the idea that we should spread labour over a larger number. I know they strongly favour reduction of hours, and I think there is a good deal to be said for that, but I see no hope of our being able to do that until there is international agreement. Judging by the
amount of success which we have had in other directions in matters calling for international agreement, there is not much hope of that agreement being reached in the near future. The reason why I refer to this is because I regard unemployment as largely an economic problem. Among the 2,000,000 unemployed we are supporting a very large number of middle-aged men with families, upon unemployment insurance benefit or transitional payments, and they are the most expensive part of the population to support in that manner. Other sections of the population could be much more economically supported, with economic and with social benefit to the State, compared with the present state of affairs.
It is a well known fact that many of the best firms in the country have established superannuation schemes for their older workers. Some of the schemes are on a very generous basis and there is no doubt that as prosperity returns that system will spread. There is a large company in my constituency with a great number of employés which is shortly to introduce a, superannuation scheme for its workers who desire to withdraw from work upon a pension of £1 per week. It would be far more economical if we could devise a scheme by which we could facilitate, I will not say the total, but at any rate the partial, retirement of the older men from the labour market. It would be much cheaper to support them, because their needs are not so great. Take the case of a man of 60; his family are usually already out at work and earning their own livings and it is usually only a question of supporting him and his wife. In doing that, you would be putting into work middle-aged men and younger men with families, who are far more expensive to support. From the economic point of view, that seems a proposition worth considering. I hope to refer to the matter again on a more suitable occasion, when the House is debating labour or unemployment questions, and I will not pursue it further at this moment.
There are a few other matters upon which I want to say a word or two. The first is with reference to Local Loans. Last night we passed a resolution which would empower the Chancellor of the Exchequer to make new issues on account of the Local Loans Fund and, as I under-
stand, to provide for the redemption of the present 3 per cent. Local Loans. I understand that he intends in some way, when the occasion offers, to redeem the 3 per cent. Local Loans. I do not expect the Chancellor to make a definite statement on this subject, but I hope that he will very seriously consider the financial wisdom of such a step. These loans are not redeemable. They cost the State 3 per cent. It is true that it may be possible to replace them on a slightly lower interest basis with a fixed-term redemption after a, comparatively short time, but I hope the Chancellor will not lose sight of the fact that if they are replaced in that manner we shall run a very considerable risk when they come in for redemption, that they may have to be replaced at a very much higher rate than the 3 per cent., which is the present rate on Local Loans. I think the matter can be pressed very much too far. To my personal knowledge, the gilt-edged market, when it was more or less at its peak the other day, had already reached a stage where there was a disclination on the part of the ordinary private investor to invest in Government funds, because the rate of interest so obtainable was not sufficient to satisfy his desire, and in many cases, especially in the case of those who are not blessed with a very large share of this world's wealth, not even adequate to provide the income needed.
The last point is with regard to the Exchange Equalisation Fund. Last year the Chancellor told us that the position of the fund was satisfactory, and that there was a profit on it. This year 1 understood him to say that it was even more satisfactory. Coming from him, that is all the information that one would need in the usual way, and is certainly very satisfying. I hold the view, however, that, so soon as the situation is sufficiently stable to make it possible, it is in every way desirable that some definite financial statement concerning that fund should be made periodically, with the necessary safeguards. I not only think it is due to the House and to the country that such a statement should be made, but also that it is actually in the interest of stability, and that it should, if the fund has to be continued, even be helpful in achieving
the real results which the fund was set up to achieve. The object of the fund is to make for stability in our exchange, and I have yet to learn that any machinery can be fully used in the interest of stability if that machinery is of a secret and hidden nature. The object of the periodical statements of the Bank of England is to inspire confidence in the Bank of England. If we are to continue a money system run on the basis on which it is run to-day, coupled with an Exchange Equalisation Fund, and if we are to achieve the best stability that is possible on that basis, I am convinced that we can only achieve it if we also have periodical statements on the state of the Exchange Equalisation Fund.

6.47 p.m.

Mr. WEST: I am sorry I cannot join in the chorus of congratulation to the Chancellor of the Exchequer, although, of course, I share the general admiration of his efficiency as a Minister. Taking the first question with which I would like to deal, namely, the question of the restoration of cuts, it seems to me that that is rather a false name, because all that has been taken away from the people in these four years of the National Government has certainly not been restored. I have some very approximate figures showing the total amount taken from the people generally since 1931. According to my calculations, in salary cuts alone various classes of the people have lost over £34,000,000. As regards extra contributions to unemployment insurance, a figure of £21,000,000 has been given. We have never had any figures with regard to the means test, but I think it would be modest to assume that the total amount taken from the people as a result of the means test must be something in the neighbourhood of £60,000,000 in the last four years. If these figures are approximately correct, they show that nearly £120,000,000 has been lost by the people in wages, increased burdens, and so on since 1931, and nobody, as far as I know, has claimed that the Chancellor of the Exchequer in this or any other Budget has restored that £120,000,000. Indeed, extra contributions to unemployment insurance amounting to, I believe, £6,000,000 a year, and the means test in its entirety, are still being borne by the people of this country. The truth seems to be that the Government decided not to restore the cuts
inflicted, but rather to reduce the amount of future robberies of the poor. For these small mercies I am, and we all ought to be, duly thankful, but we ought not to forget the enormous burden that has been borne by the people in previous years.
Much credit has been taken by supporters of the Government on the question of balanced Budgets, but I think everyone agrees that this Budget has been balanced, first, by raiding the Road Fund; secondly, by ignoring the Sinking Fund; and, thirdly, by also ignoring the American debt. It seems to me that every Budget since the war—since 1920 at any rate—with perhaps one exception, could well have been balanced if previous Chancellors had adopted the same expedients as the present Chancellor of the Exchequer. I well remember that in the time of the last Labour Government the hon. Member for South Kensington (Sir W. Davison) and many of his colleagues used to wax extraordinarily indignant about the attitude of the Soviet Government in repudiating their debts, but of course it was a totally different story when we adopted a similar expedient towards America. We did not call it repudiation; we were more polite and courteous than the Russians, and called it a suspension, or a moratorium, or some nicer term; but of course the truth is that we were guilty, if it be guilt, of the very same policy as the Russian Government which has been so much condemned.

Mr. ALBERY: If the American Government do not call it repudiation, why should we do so?

Mr. WEST: I should be sorry to call it repudiation; that is a nasty word. The Soviet Government also refused to agree to the term "repudiation," so we are in the same boat. The hon. and learned Member for Central Nottingham (Mr. O'Connor) yesterday said, as I am saying, but in better language than I can command:
Our debt to America is so academic that it has disappeared apparently from our financial consideration.—[OFFICIAL REPORT, 16th April, 1935; col. 1754, Vol. 300.]
If it has disappeared from our finances, it is perfectly correct to call it repudiation. I am quite certain that the Americans do not mind what word we
use. They know that they are not going to get the instalments that we have been paying for the last 10 years, so we can call it what we like, but repudiation fits our case as much as it fits the Russian case.
Some hon. Members apposite have advocated very strongly a reduction in the Income Tax, on the ground that it will give an impetus to trade and employment. The right hon. and gallant Gentleman the Member for Ripon (Major Hills) said yesterday that the best remedy for unemployment would be to take 6d. off the Income Tax—that it would give an enormous stimulus to trade, and so on. Many hon. Members opposite agree with that, and, indeed, the Chancellor of the Exchequer gave it as one of his reasons when last year he reduced the tax by 6d. He said that it would stimulate trade more than anything else he could do. I believe that events have proved that to be absolutely false. There has not been a great stimulus to trade in the last 12 months. The official figures show that, since the last Budget statement in 1934, unemployment has declined by only 48,000—a very tiny reduction in unemployment in 12 months—at a cost of £25,000,000 in reduced Income Tax receipts.
I know that the hon. Member for Chislehurst (Sir W. Smithers) said yesterday that there must have been a great stimulus to trade as a result of the reduction in Income Tax, because the number of people employed has increased by 500,000 since 1933. That is an extraordinary statement to make. A similar analogy would be to say that in 1880, when the Income Tax was less than 6d. in the £, the number of employed persons was less than 7,000,000, and to-day, with the Income Tax at 4s. 6d., we employ over 10,000,000 persons, so that, as a result of multiplying the Income Tax nine times in the last 50 years, we have 3,000,000 more people working than we had with a 6d. Income Tax in 1880. I would not, of course, use that argument myself I agree that it is an illogical and foolish argument; but it is exactly on a par with the argument that we have 500,000 more people employed to-day than in 1933 as a consequence of a reduction in the Income Tax.
I have listened in this Chamber during the last 12 months to all kinds of explanations of the cause of the increasing employment of people in this country. I have heard hon. Members opposite claim that it has been due to tariffs; I have heard it stated that it has been partly caused by cheap money; and yesterday I heard that it was due to Income Tax reductions. I have also heard it urged that it has been due to depreciation of sterling in comparison with other currencies. At different times, therefore, at least four different explanations have been advanced. I do not pretend to know which of these factors is the most important one, but I believe that the most important factor of all is the fact that the National Government has been in office in a period of extraordinary good fortune, at a time when world trade was on the up grade; and, whether the Government had been Labour, Liberal, Communist or National in the years between 1930 and 1935, I honestly believe that world trade would have been on the same up grade. None of those hon. Members opposite who now smile believes that better trade in Germany or in America is due to the National Government of Great Britain. They might say so at their meetings, but I do not think they would really believe it to be true. Trade has improved, not only in Great Britain but in most countries of Europe, and in most parts of the world, and no Government can claim that it has been due to their action any more than, when the history of the last 10 years is written, it will be said that the unemployment of 1930–31 was caused by the action of the Labour Government. It is said in propaganda at meetings, but most of those who say it know that it is not true. As, however, it seems to he a good point, they use it, as politicians do.
If we really need, as we do need, to stimulate trade, I suggest that one good method would be the abolition of what we know as the household means test; and a second method would be to increase the social services. This afternoon the point has been made by hon. Members opposite that we have spent £500,000,000 on social services. I have heard that statement being made for 12 months. It is not true, of course, but it is continually being made by people who must know that it is really not true. £500,000,000 is
an impressive figure. One hon. Member said to-day that we have spent on social services an amount equal to £1 a week for 10,000,000 families. That comes to £520,000,000; the hon. Member has added £20,000,000 in a few minutes. That, however, leave out of account entirely the fact that the people themselves make a very substantial contribution to these social services, amounting approximately, I should say to between £120,000,000 and £150,000,000. If that be true, and I think it is, the amount spent on social services is not £500,000,000, but something like £350,000,000. That is a, large amount, and it is a, wonderful and marvellous achievement for any social system and any Government to be able to afford £350,000,000 for social services. But, because it is wonderful, that is no reason for adding £160,000,000 or £170,000,000 to make it even more formidable. Let it be left at the true amount, £350,000,000.
I suggest that it would be a great stimulus to trade if we could abolish the means test, and could also increase old age pensions to a reasonably humane figure, say £1 a week at 60. I think the people concerned deserve that, and I think the money could be found. I suggest that if the money could be found for those social services, the stimulus resulting to trade from the increased buying power of the people would be enormously greater than the stimulus given to trade by reducing Income Tax by 6d. or 1s. in the pound. My little study of economics has made me believe that purchasing power in the hands of certain classes is very much more important than similar purchasing power in the hands of others. I believe £100,000,000 in the hands of the wealthy, from a spending power point of view, is not nearly as valuable to trade as £100,000,000 in the pockets of the ordinary people of this country. These people who would benefit by a reduction of Income Tax could not wear ten times more shirts, or ten times more boots, or use ten times more furniture, or build ten times more houses than they do at present, They have a limited consumption. They are more likely to expend their money in production of capital goods of which we have a surplus, and, what is much worse, they might invest their money abroad. It is done every year.
Increased financial power in the hands of the wealthy may result, and does result,
in increased investment in the Argentine or in Japan. [An HON. MEMBER: "Or in Russia!"] I will come to the question of Russia if you like, but the result of increasing investments in India may result in grave competition with Lancashire goods. Investment in cheap labour factories in India is not a good thing for the trade of this country. Investing millions in Japanese or Chinese factories would be to the detriment of employment in this country. But if the money were in the hands of the old age pensioners of this country it would not be invested abroad. They would not invest their money in Indian factories; they would spend it on shirts, boots, general clothing, food, and furniture. They would have the weekly purchase of goods of which they are particularly in need, and they would stimulate just those trades which are most in need of stimulation to-day. Increased buying power in the hands of the ordinary people is very much more valuable than increased buying power in the hands of the well-to-do. If that is not true, I should like to have the theory exposed.
The hon. Member for Salford South (Mr. Stourton) made a very unfair and unjust attack yesterday on the right hon. Gentleman the Leader of my party. He quoted the right hon. Gentleman as saying that to give the unemployed the best standard of wages would cost round about £350,000,000, and then he went on to attack the proposal of some hon. Members to give pensions of £1 a week at the age of 60. He said that would cost £220,000,000 a year, rising to £280,000,000 a year in 20 years time. Although it is true that the figure of £280,000,000 as the cost of old age pensions at 60 has been given, it is only reached by including every type and class of person in this country, but when the millionaires and people with £1,000 are excluded, the figures given across the Table were not £280,000,000, but less than £140,000,000. Thus the hon. Gentleman who made that statement was only £140,000,000 out in his calculation. The hon. Member for South Salford said:
Such a fraudulent prospectus would hardly mislead the most ignorant elector.—[OFFICIAL REPORT, 16th April, 1935; col. 1791, Vol. 300.]
I think that was a disgraceful thing to say in this House, because, in my judgment, there was no more fraudulent
prospectus ever issued than that issued in 1931 by his own party when they made a statement about the Post Office savings and the effect of coming off the Gold Standard. There was never a more misleading statement than that. His own party on previous occasions made statements about hanging the Kaiser, making Germany pay, and the red letter. It does not come very well from Members of the party opposite to refer to misleading the electors from this side of the House. The same Members opposite have advocated relief for whisky distillers, otherwise people would lose their taste for whisky. I should regard that as a jolly good thing. If they lost their taste for whisky, would that be a national disaster? I think even the Chancellor of the Exchequer will agree that it would not be so. Let us lose that revenue so far as I am concerned. The money not spent on whisky might be spent on stockings, boots and furniture, and would not go to benefit Members opposite who are interested in distilling whisky.

Mr. DORAN: Or Guinness.

Mr. WEST: Or Guinness. "Guinness is good for you." Guinness is good for the National Government. The brewing companies of this country owe a real debt of gratitude to the Government for what they have done for them. Some of us do not regard them as the saviours of the Empire, but the brewers have always looked upon the Tory party as supporters of the drink trade. I have no doubt the hon. Gentleman is an authority on whisky and Guinness.
I would like to conclude by drawing attention to the Chancellor's remark about having attained 80 per cent. of prosperity. I do not know that he has been too communicative about these things. He has not told us too much. Does he mean that if the National Goverment still persist next year there will be 100 per cent. prosperity as compared with 1930? Even if that be attained in 1936, I do not think that will be a marvellous achievement. I am one of those people who believe that, no matter what Government we have, the inventiveness of our people and the genius of people working in all classes of society will result in progress. No Government can prevent this nation or any other nation from making great social progress.
Every generation marks an advance on previous generations. I believe there have been very few occasions in the last 100 years when the coming of a new generation has not been marked by substantial progress, and to boast that in 1936 we shall be on the same level as 1930 is not much to boast about. I believe that when the historians come to write about the period during the last five years, they will put it on record as a dull and dreary five years of economy, and I also believe that they will put it on record as a period in which our responsible statesmen failed entirely in their efforts to bring the bounteous and bountiful gifts of nature into the lives and homes of the people of this country.
Notice taken that 40 Members were not present; Committee counted, and 40 Members being present—

7.12 p.m.

Mr. KENNETH LINDSAY: If my right hon. Friend will take my congratulations to him as read, I should like to direct the attention of the House to one specific problem. I have noticed that the only two speeches from the Opposition Benches against the Budget ended in some form of abuse. The speech yesterday from the hon. Member for East Fulham (Mr. Wilmot) and the speech to-day from the hon. Member for North Hammersmith (Mr. West) after trying in vain to state some sort of argument ended by inveighing against the whole social system. This afternoon about eight or nine speeches have been made connecting up this Budget with the whole question of social services, and particularly with the question of pensions. I have been asking myself why this happened. Is it because some hon. Members on one side of the Committee can see no further method of getting any money out of the present taxation system? The hon. and learned Member for Central Nottingham (Mr. O'Connor) illustrated the difficulties yesterday in a very striking speech. On the other hand there is this crying for more and more social services which I particularly want to oppose. The hon. Member for North Hammersmith is a particularly guilty person because he advocated this idea of pensions at 60. I agree with him, however, that the
figure of £500,000,000 is quite wrong when you are dealing with social services.
The number of persons over the age of 65 has doubled during the century, and the proportion of elderly persons which is at present 7 per cent. looks like being 11 per cent. in 1951. The grip of this increasing elderly class on modern high-speed mass production in industry is steadily getting more precarious every day. Wherever you see large numbers of these elderly workers accumulating, you have a potential depressed area. The figures which the hon. Member for Huddersfield (Mr. Mabane) gave yesterday were a little misleading. I looked them up specially. When some of my hon. Friends came into the House in 1924 we were spending £24,000,000 on old age pensions, and we are spending £60,000,000 to-day. We are spending five times as much on this particular branch of the social services as we did in the first year of the War, and it is likely to increase. What I am saying is very closely related to the whole Budget figures. What is the position? There are 2,000,000 people in this country receiving old age pensions, that is, both contributory and noncontributory pensions, and 10 per cent. of them, that is 200,000, get an addition from the Poor Law of something between 3s. and 5s. In reply to a question which I put to the Chancellor of the Exchequer some weeks ago I learned that there were 1,600 firms with pension schemes, and since then I have learned that there are roughly another 1,000, so that altogether there are some 2,500 firms with insurance pension schemes.

Mr. CAPORN: Old age pension schemes?

Mr. LINDSAY: Yes. If you analyse these firms you find that they are nearly all in the relatively prosperous trades. In fact, it is a very rare occurrence in a stable export trade. The schemes are a curious medley. They are voluntary and compulsory, they are contributory and non-contributory, and they vary in amount from Is. to £1 a week. Some are for males and some are for females, and, of course, a very large number are for staffs rather than for employés. There are two particularly interesting schemes which cover whole industries. I refer to flour milling and wall paper, and, in my judgment, they are model schemes which
might be applied elsewhere, set up as they were by joint industrial councils in both cases. On the whole I estimate that there are about 300,000 wage earners who come under these schemes.
It is very surprising, as the right hon. Gentleman the Minister of Labour told me last week, that there are 106 trade union schemes, and, indeed, there are one or two among the miners, which latter is one of the most marvellous examples of thrift in this country at the present moment considering the state of the mining industry. I should say that these schemes affect 50,000 people in all. No less than £1,000,000 is paid out each year by trade unions under pension schemes. The iron and steel scheme was started with only about £2,000 capital, and that is why I am so anxious that something should be done, as the time is now ripe, especially in view of the mining gift which came almost overnight of £70,000 for South Wales miners, to start a proper pension scheme for miners in this country. It may not be known to hon. Members that in France there is a miners' pension scheme which is applied at 55 years of age, and that the miners in that scheme get, on an average, about £1 a week.
Hon Members may say, as the hon. Member for Chislehurst (Sir W. Smithers) said yesterday, and as others have said to-day, that there has been a great increase in working-class savings. I agree with the hon. Member for Gorbals (Mr. Buchanan) that we are undermining thrift in this country in a variety of curious ways. There is a magnificent increase in working-class savings, though they are rather more middle-class than working-class savings when you analyse them. But as long as we have over £1,000,000 each week taken in industrial assurance, which is a sum exceeding the whole of employers' and workers' contributions to National Health Insurance and State pensions combined, and of this £70,000,000 a year, no less than £30,000,000 goes in management expenses and dividends, we are not making the most of organised thrift. In fact, further investigation into the methods and practices of the multitude of small clubs and societies which attract working-class savings is overdue. My hon. and learned Friend the Member for Central Nottingham yesterday referred to the mobilisation of these savings for the benefit of industries in the future, and I think that that is
going to be more and more an important question.
I do not raise this question in any other sense except to press the Chancellor of the Exchequer for an inquiry into the whole matter. I agree with the hon. Member for Gorbals that it is absolutely wicked of hon. Members of the party opposite to go about the country speaking about pensions of a pound a week at 60 when they know as well as anybody that it is quite impossible and impracticable at the present moment. I am urging an inquiry into the whole question. You have the case of a man who is married and he and his wife are both over 65 and receiving £1 a week in addition to wages. I do not grudge them this at all, but there are a whole host of anomalies where the money is not being directed into the proper channels.

Mr. LOGAN: Does the bon. Gentleman suggest the general practicability of a contributory scheme?

Mr. LINDSAY: I am prepared to go into the figures with the hon. Gentleman afterwards, but I cannot suggest new legislation now. I have my own ideas about the question, but at present I am asking for an inquiry. We have to get a picture into our minds of what sort of society we want to see 10 or 20 years' hence in this country. If we are working towards a servile State, let us say so, but if we are working towards a, state of society where we want to see millions of responsible citizens with a stake in industry and in prosperity, if we are going to continue this peculiar contribution which Great Britain has made to social services—I mean contributory insurance or organised thrift, or whatever you like to call it—then, I think we can combine a pension scheme with a State scheme. I plead with the Chancellor of the Exchequer to make the necessary inquiries for a remodelling of the pension policy of this country during the coming year, otherwise we shall have a repetition of competitive bargaining at the polls one candidate saying, "I will give so much," and another candidate saying, "I will give so much more," which is most degrading to the whole standard of politics. Indeed, I will go so far as to say that most of our social services, and particularly those of health and education, need remodelling. It is not so much a question of spending more, but of
getting more value out of the expenditure. I will not go into my own suggestions in regard to this matter, but I will close on this point. It is not only a question of money. I am reminded of Edmund Blunden's poem, "The Almswomen" in which he says:
They had all things in common, being so poor.
It is a problem not only of money but of leisure and of housing. I asked the right hon. Gentleman the Minister of Labour two questions this afternoon, but he could not answer either of them.

Mr. GRIFFITHS: He did not want to

Mr. LINDSAY: There are 100,000 people at the present moment over 55, either miners or in the depressed areas, for whom there is no likelihood of work in their own occupation, and it is imperative to have a policy in respect of them. Do not let the Government think that they will not have to pay. They will have to pay in some way or other. I am suggesting that they pay by a more sensible method, and that the incidence falls in the right place. There is the question of houses. Two or three local authorities and one or two industries have already made special provision for cheap rents, 2s. 6d., for old couples. There is the question of plots and some attachment, besides just sitting about, for old people over 65 years of age. There are certain firms which provide clubs. We have to approach the amenity and leisure side and add it to the financial side, and if the State will provide a platform on which schemes run by trade unions and by firms, and if the savings which have been accumulated are added, I believe that we shall be able to provide for the more aged persons in the country a much more happy end to their lives. I believe that such a proposal would take the strain off the middle years of their lives and enable, according to my figures, something like 150,000 men in the middle years to get back to work and make family life sweeter through the whole journey.

Mr. GURNEY BRAITHWAITE: May I ask a question of my hon. Friend arising out of his very interesting speech? He spoke of a miners' pension scheme in France at the age of 55 at approximately £1 a week. Can he inform the Committee whether there is a
State contribution to that scheme, and if so; what it is?

Mr. LINDSAY: I cannot go into details now, but it is a tripartite scheme contributed to by the State, the employer and the workman, and it is very old.

7.26 p.m.

Mr. ORR-EWING: I rise for a few moments to add my very small tribute to the many tributes which have been paid already to the Chancellor of the Exchequer. More particularly would I stress the tremendous value of the relief of taxation to those with smaller incomes which has been granted, representing as I do a constituency which contains one of the healthiest of all the seaside resorts of the country, and to which naturally are attracted those in the later years of their life. I should like to assure him that already there is very direct appreciation of the benefit which his action is about to bring to my constituents. Further, I would like to thank him in particular for the relief as regards Entertainments Duty. To those entertainments where living performers appear, I think that this assistance and help will do a great deal to foster and increase the interest that is growing all over the country in dramatic performances, and which are of very great assistance in enabling the people of this country to learn how to express themselves.
But perhaps those in the country who benefit by this Budget would have been a little surprised at some of the speeches we have heard from the benches above the Gangway, and more particularly perhaps the very defeatist speech of the hon. Member for North Hammersmith (Mr. West). I regret that he is not in his place at the present time. He claimed that any recovery which this country had made, and which had made it possible for the Chancellor of the Exchequer to produce his Budget, was merely fortuitous, and he asserted that our progress in this country had merely been on parallel lines, and to an equal amount as that progress which has been achieved by other countries. I do not think that a statement of that kind should go uncontradicted one moment longer than is necessary, and it is surely unnecessary to repeat that we have not only recovered in ourselves, but that we have in truth
recovered at a greater rate than any other nation in the world, under this Government.
I have risen in my place to draw attention in particular to the question of the withdrawal of the rebate on heavy oils used for road transport. I do not propose to go into the detailed effects of the withdrawal of this rebate on road transport, because I do not believe that details of the effect have yet been exactly ascertained. From figures which have been supplied I understand that the increase is something like £90 a year in the fuel operating costs of a 60-seater omnibus. That in itself does not appear to be a very large sum, but multiplied by many hundreds it will very seriously affect the passenger transport system. Parallel figures applied to the transport of goods by road are going to shock many of those people whose goods have been carried probably during the last two years or so by this newly developed form of transport.
But I am not so particularly interested in the direct effect of the removal of the rebate, though it probably will result either in an increase in fares or in the withdrawal of the less remunerative services from a great system which has been enabled to carry the unremunerative services on the back of the more remunerative branches. I am more particularly interested in the indirect effect of the withdrawal of the rebate, and I would ask the Chancellor of the Exchequer to give us some information as regards the possibility of the supply of indigenous fuel to replace fuel imported to these shores, indigenous fuel, I understand, being free of duty. I am assuming from the information that I have been able to obtain that some considerable proportion of these oils could be produced in this country within a very few months, and in so far as the withdrawal of the rebate causes an encouragement of that production it is desirable, but how far can that go? What proportion of the total Diesel oil fuel requirements could be produced within our shores economically?
The most important effect of the withdrawal of the rebate on the industry is the indirect effect. The motor transport industry is the only large field in which experiments can be carried out for the development of any new type of internal combustion engine, and an attack upon
that field at this moment is particularly unfortunate. We have seen a very rapid growth in the manufacture of Diesel engines and in the use of Diesel engines. Five years ago only just over 100 Diesel vehicles were on the road; to-day there are well over 6,000, which shows that the development of the Diesel engine has not only been efficient but rapid, and it has also been fully appreciated. The Diesel engine itself has also done much to develop other parts of the transport machine. It is not unfair to claim that it has entirely revolutionised the transmission system of the motor car, as we know it to-day. Experiments in the production of the Diesel engine have done a great deal to encourage metallurgical science and experiments. The mere fact that the Diesel engine is in demand has caused to be in demand new alloys and special steels and metals able to stand the extremely high temperatures generated in that particular type of engine.
There is a further indirect effect to which I would call attention. Every hon. Member is aware of the unfortunate condition of some branches of our fishing industry. It is possible that the lower operating costs of the Diesel engine might do something towards solving the problems of and assisting that industry, but the capital of the fishing industry by itself and the actual field of the marine market alone for the. Diesel engine is not enough to enable our Diesel engine manufacturers to carry out the expensive and necessary experiments that are required before those marine engines can be evolved and put upon the market. I might carry the argument one stage further, and refer to the possibility of the development out of the present high speed Diesel engine, of an aero engine. Again, every experiment that is carried out on the road has taught the Diesel engineer something and any discouragement of his further experimentation is extremely dangerous to progress. Even beyond these points of view, I believe that the question of principle involved in thus tackling this industry is a very serious one. I was profoundly shocked last night when the Financial Secretary to the Treasury used these words with regard to this duty:
It is mainly to meet a loss of income that the Exchequer suffered in consequence of the competition of Diesel oil engines with light oil engines.
If that is to be the policy of government in this country for the future, then, surely, we have started much too late. It is what one might call the Back-to-Methuselah policy. Because a new invention competes with an existing invention, tax it. How is it that we did not impose an exorbitant tax upon the petrol engine in order to protect the horse, or why did we not impose a heavy tax upon the horse in order to protect the litter, and so on. The Diesel engine has by no means had it all its own way. The initial cost of producing a new machine in small quantities has been almost prohibitive. The additional weight of the Diesel engine as compared with the petrol engine has raised the class of vehicle installed with a Diesel engine into a higher rated class of taxation. The whole way along the line the Diesel engine has been extremely vulnerable and unprotected. It has even had to pay heavy licensing fees to the inventors, and in many ways it has been heavily loaded. This Back-to-Methuselah policy may well prove a very serious handicap in the development of an industry which is of international importance at the present time. The Financial Secretary went on to say:
That shows that competition so large could no longer be disregarded. I think it is a very fortunate thing that it has been dealt with at this stage, before people were more committed to these new engines, and before vested interests were created on the understanding that they were going to pay this extremely low duty.
That seems to me to be a very curious argument to use in supporting the withdrawal of this rebate. It is a direct argument to discourage the actual coming into existence of a new industry at the very moment when new capital wishes to be encouraged or almost to be driven into rejuvenating and building up an industry which is producing an actual machine which is of value in our national life, and also of value with regard to our export trade in competing with the products of other countries. Finally, the Financial Secretary said:
It is surely more stimulating to inventions not to have too great an advantage, otherwise there would be little incentive to enter into new developments.—[OFFICIAL, REPORT, 16th April, 1935; cols. 1810–11, Vol. 300.]
That is a most shocking and surprising suggestion. It is like suggesting that a
child should be left in its cot with a net over the top and then be expected to run a race without any training, without being able even to toddle, and to keep pace with others at a moment selected by the Chancellor of the Exchequer, and to hold its own. Some of the contrasts as regards the proposals to deal with Diesel oils are very remarkable. I can imagine one's feelings in flying in an assisted aeroplane, from an assisted aerodrome, being piloted by an assisted pilot and flying over some of those counties which grow assisted wheat and assisted sugar-beet. It seems to me extremely unfortunate that, while a burden is being placed upon a growing industry which showed every sign of development on sound economic lines, the Government should at the same time assist on a colossal scale, a scale almost equal to 1 per cent. of the total revenue of the country, an industry which has proved itself absolutely and entirely uneconomic. We see allowance made for the payment of the subsidy to the beet-sugar industry in the same official papers in which we see a proposal made to add to the burden of an entirely economic industry.
I hope that next year we shall not see a recurrence of this state of things. I can only hope that the Chancellor of the Exchequer will keep a very watchful eye on the Diesel industry and that he will see to it that if the withdrawal of this rebate does really have a deleterious effect on the development of the industry, if it, has a bad effect on the efficiency of the transport system of the country, and if it also has a bad effect on the export of the Diesel engine, he will do something even before next year to see that the rebate is corrected. I would ask him not to consider this question as a definite standard of taxation, but to look at the question from the point of view of having to nurse a very young and very flourishing plant. Further, I would ask him to give every encouragement to us to believe that next year we shall not have to make such colossal allowance to support the most uneconomic industry in the country, namely, the sugar-beet industry. In saying that, I bear no grudge against that industry. I should like to see it continue in existence, but I do not believe that we are entitled to canalise such a colossal sum of money into such
a small number of pockets concentrated in such a very small area.

7.44 p.m.

Mr. LOFTUS: I will not deal at length with the speech of my hon. Friend the Member for Weston-super-mare (Mr. Orr-Ewing) except to make two remarks. In the first place, let me refer to the sugar-beet industry which the hon. Member so severely criticised. That industry has saved East Anglia from complete collapse, and any destruction of that industry, at a time when the agricultural workers have received a 3s. increase of wage which has come in the last 12 months, would cause disaster. In his attack on the Heavy Oil Duty, my hon. Friend represented the Chancellor of the Exchequer as one who was coming forward to crush a new industry by taxation. It appears to me that, instead of comparing the horse with the train and the train with the motor car, the fair comparison would have been this: Suppose my right hon. Friend were faced with an immense loss of revenue due to some kind of substitute which was driving out tobacco, would he not be justified in taxing that new substitute at the same rate purely for the purpose of saving his revenue from tobacco? That seems to me a similar case.

Mr. ORR-EW1NG: I cannot accept that comparison. So far as I know, tobacco has never been looked upon as liable to bring about a more efficient state of society. On the other hand, in my opinion the Diesel engine would undoubtedly make for a more efficient community.

Mr. LOFTUS: I will not pursue the matter further, but I will turn to the Budget statement of my right hon. Friend the Chancellor of the Exchequer. I am sure he must be weary almost of receiving just praises on this Budget from so many speakers, but, if I may, I would single out one aspect of his work as Chancellor of the Exchequer which I believe history will call the greatest achievement of the National Government's many achievements, and that is the fact that it has during the past year kept the purchasing power of sterling steady. I do not think we are yet in a position to realise the effect that that has had on our movement towards prosperity. I know that the hon. Member for East Edinburgh (Mr. D. Mason)
has attacked that policy and has talked about the depreciation of the pound as affecting wages. I was staggered to hear his argument. Does he not realise that when we went back to gold in 1925—and I sat in the Gallery of this House and heard the final debate—it meant a bitter deflation and the constant forcing down of wages, and it meant that series of strikes culminating in the coal stoppage and the bitter deflation of the succeeding years? When I heard the right hon. Member for Darwen (Sir H. Samuel) yesterday accuse—I suppose it was an accusation—the Chancellor of the Exchequer on having in the last 12 months allowed the pound to depreciate by one eighth, by 12½ per cent. I would like to ask him if he would carry that argument to its logical conclusion and say that my right hon. Friend ought in the past 12 months to have gone back to deflation. I am sure that if he had, the country would have repudiated him.

Mr. D. MASON: The hon. Gentleman does my right hon. Friend an injustice. Surely he recognises that there is a moral responsibility involved in this matter.

Mr. LOFTUS: I suggest that the moral responsibility is that a debt incurred in currency should in the future be paid back in currency of the same purchasing power as it had at the time when the debt was incurred—that is to say, the purchasing power of commodities, not of gold. I believe that during the last four years those countries which have tied their currency to many commodities, or which have kept the purchasing power of their currency stable, have alone shown progress and alone increased in prosperity, while, on the other hand, all those nations which have tied their currency to one commodity, gold, have suffered increasingly month by month. If that be the case, surely it is a matter of immense concern to every Member of this House as it may point towards a road of immense progress for us and for other nations in the future. I was discussing this question of a fixed currency in terms of commodities with a most eminent authority lately, and I asked what would be the effect if we could maintain the purchasing power of sterling at a level price. This eminent authority replied that one effect would be that in a very few years we should have abolished the greater part of personal and business debt. I should
be happy to give the name of that authority to any hon. Member who might wish to know it, and I may say that it is one whose opinion I am sure would be accepted by every prominent Member of this House.
There is a question whether the present level of sterling is not indeed too high, whether the purchasing power of sterling to-day is not higher than it should be in relation to the economic structure of the country. There are eminent economists who believe that the purchasing power of sterling to-day is too high in relation to the general debt structure of the country. They point out that the retail price index of to-day is 139 as compared with 100 prewar, and that before the War we had a National Debt of £700,000,000 at somewhere about 3 per cent., while to-day it is £7,000,000,000 at over 3¼ per cent. I myself am not learned or bold enough to make any definite statement upon it, nor would I expect my right hon. Friend the Chancellor of the Exchequer to make any statement on it. It is a very contentious problem, but with regard to the point raised by the hon. Member for East Edinburgh when he brought out, quite rightly, that if sterling was a higher value in terms of gold, this means that we buy our imports much cheaper. That argument I placed before an eminent authority with special regard to our interest on foreign investments, and his answer was that the lowering of the value of sterling or, what is the same thing, the raising of prices would result in the debtor nations paying interest on securities now in default and also in making ordinary share capital in foreign businesses again profitable.
There is one other point that I would like to mention, and that is the fear that has been expressed in this Debate from many quarters of what will happen to international trade if currencies fluctuate yet more than is the case to-day. That is a danger which, to me, is a nightmare. I see the possibility that perhaps within six months Holland may be off gold, Switzerland also, and France possibly before the end of this year, and the nightmare which I have is that with all the countries off gold the mass of fugitive capital which is called bad money may go hurrying from one capital to another in panic and as it moves
currencies depreciate or appreciate by 20 or 30 per cent. in one week. If that nightmare comes to pass—and I believe it may happen this yearx2014;international trade will be impossible. It will become merely a question of speculating in foreign currencies. I am sure His Majesty's Government is preparing plans to meet that situation if and when it arises. I believe that to-day much may be done. One danger when that happens will be the movement of this money seeking safety and the operations of the money speculators. I think it might be advisable before that time comes that preparations should be made to make dealing in foreign currencies a monopoly of the central banks. That would help enormously.
The second step that I would venture to suggest is that even now, without summoning conferences and even without publicity, we could, by taking steps within the sterling area, in the British Empire, Scandinavia, and South America, stabilise currencies, not on gold, but at certain fixed rates of exchange. If we started doing that now and if this crisis came because the gold countries were driven off gold, we at any rate could stimulate and improve immensely trade in the sterling area right away, and we should attract other nations to come into that stabilised area. If that could be prepared and plans laid, like the plans of a general staff in war time, we would be ready if and when this crisis came upon us.
I would end by saying that I was greatly impressed by the speech of the hon. and learned Member for Central Nottingham (Mr. O'Connor). I think his vision of a diminishing yield of taxation and an automatically increasing demand for expenditure was a vision that must have impressed every thinking Member of the House, and I feel that we shall have to invent some technique in future years to meet that position, possibly involving some method whereby the Government from time to time, possibly during a period of falling prices would use the national credit to raise some part of the money required for its own purposes without the burden of interest. I think the position could be summed up in the words used by my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) yesterday, in his interesting speech, when he said:
The great and vital world problem still remains—how the countries of the world are to exchange their goods and to cease making money a.—[OFFFICIAL REPORT, 16th April, 1935; col. 1749, Vol. 300.]
I believe that that sentence contains the key to the best future policy for this country.

7.59 p.m.

Mr. DAVID EVANS: I should like to say that I entirely associate myself with some of the remarks made by the hon. Member for Weston-super-Mare (Mr. Orr-Ewing) with regard to the tax on heavy fuel oil, and I entirely dissociate myself from the remarks made by the Member who has just spoken. He seemed to think that there was a comparison between the tax on a commodity like tobacco and a tax on what is essentially a raw material for use in productive industry. When we learned our economics we were all taught that the first commodity to be taxed, if you are going to have any indirect taxation at all, is something which is in the nature of a luxury; something which is not a prime necessity of life and something which people can do without if they so choose. There is no comparison at all between a tax of that sort and the tax which the Chancellor has now imposed on heavy fuel oil which is to be used for road transport. I cannot understand why this Government, of all Governments, is proposing taxes of this particular character, because we understand that this Government prides itself on the policy which it has laid down for the safeguarding of our industrial system.
It must surely be admitted that this is a tax which is unsound in principle and which is conducive to the restriction of a developing industry. It cannot but do harm to that industry. Certainly it cannot do the industry any good. According to everybody in a position to speak with knowledge on the subject, it will of necessity have the effect of tending to cripple this particular industry, which is going to be so important to the development of transport in this country. I only want to say just a few words on that point now. I have already, in past years, drawn the attention of the Government to the effect of the taxation of fuel oil for furnace uses. It is obvious that it is wrong in principle for anyone
in one industry to come along and say to the Chancellor of the Exchequer: "Will you put a. tax on this other industry, because it is damaging our particular form of industry?" To my mind, that is unsound in principle. We know of delicate processes which are being followed to-day in our large industrial cities by successful concerns which are having their costs of production increased by this form of taxation, which the Government are following up and developing. Long before I came to this House I always thought that the Government's policy—not the policy of this particular Government, but the policy of all Governments—regarding the taxation of the motor car industry was bad in principle.
I venture to say that the high licence duty on horse-power which has existed in this country ever since the starting of the motor-car industry—together with the Petrol Duty imposed on the users of motor cars—is bad in principle and a method of taxation which does tend to cripple a great industry which is one of the most successful industries we have got. I may say that I have no direct concern with the motor-car industry at all. Whatever progress the industry is making it is certain that it has had a very small footing so far in the export trade of this country. It has failed to secure a substantial footing in the foreign markets of the world as compared with the motor-car industry of the United States, for example. I think that one chief cause of that is the taxation policy of successive Governments. It is no answer now for the Chancellor of the Exchequer to say: "I am bound to increase the tax on heavy fuel oil because it is gradually depriving me of my revenue from petrol." That is an unsound argument from the point of view of industry. What should be done, rather than increase the tax on heavy oil, is to reduce the Petrol Duty. That would lead to far more development in the industry than any other action the Government have taken so far by protective taxation of the motor-car industry. It would stimulate trade and give a chance to motorcar manufacturers to obtain a substantial footing in the foreign markets.
I do not wish to follow the rather complex discussion which has taken place between the hon. Member for Lowestoft (Mr. Loftus) and my hon. Friend the
Member for East Edinburgh (Mr. D. Mason) on the importance of the stability of currencies. The more I talk to economists on this matter the more confused I become. Everybody tells me a different story about it. I only want to say that I am entirely at one with the views expressed by my hon. Friend the Member for East Edinburgh when he says it is extremely important, in order to stimulate international trade, to have at any rate currencies which are stable, so that the traders who export goods from this country know where they are. That is obvious. It is common sense. No economist need tell me this, and there is no need for any theoretical discussion about it. All those who are doing any export trade must realise that one of the greatest obstacles to the development of the export trade between this and other countries, or to the purchase of raw materials for import into this country, is the fact that this Government has failed, either itself alone or in conjunction with other Governments, to provide us with a currency which is stable and which everybody can understand. Surely one of the chief objects which this or any other Government should have is—not by unilateral action because we know it cannot be done—at any rate to keep in constant touch with these problems and let its opinion be known. We are a great exporting nation which knows more about international trade and currencies than any other in the world. With all that experience behind us, surely, if this country cannot lead in the question of peace it can lead in the question of currency stabilisation in the world.
I want to detain the House for a few minutes longer on another aspect of the Budget. The Chancellor of the Exchequer has to provide large sums of money in his Budget to give subsidies to various industries. If none of these subsidies had to be given, obviously there would be the possibility of a further reduction of taxation. Definite figures are provided in the financial statement issued to us, and it is indicated that certain subsidies, for beet-sugar and for other purposes, will have to be increased during the year. We do not know what the extent of that is going to be. I have found it extremely difficult to decide what view to take when these proposals Are put forward periodically for a
subsidy to this or that industry. I confess that I find it extremely difficult to reject a subsidy for one kind of industry which may be destined in its result to help a particular industry in my own constituency. That is a feeling which we must all have.
I have listened with amazement to speeches made here by hon. Members specially interested in one particular industry; and when the question of a subsidy to that industry has been considered by the House practically all the speeches have been delivered by members of that industry. That is a thing, I submit, which was unheard of in this House say 20, 30 or 40 years ago. It is extremely difficult for an hon. Member who is either directly or indirectly interested in a particular industry—or indirectly interested in a particular industry because his own constituents are interested in it—to refuse something which he thinks may benefit a certain section of the population of his own constituency and when he knows that the subsidy, so we have been told, may save certain people from bankruptcy. I submit that whatever these large sums of money provided in the Budget are for it is time for the House to ask itself seriously upon what principle these subsidies are being given. What principle do the Government lay down for the future in considering what action to take in respect of appeals which apparently are bound to come to them?
From time to time we have heard references to the beet-sugar subsidy. We have had a Committee set up and there has been a Majority Report and a Minority Report. The Majority Report has been written by two gentlemen whose names are familiar to all of us in this House. The name of one of them is that of a very distinguished member of the Bar who, I should say, by his reputation is certainly one of the ablest and shrewdest men at the Bar to-day. The second member of that Committee is a gentleman who has been entrusted with investigations of this character by successive Governments. We have had the report of these two gentlemen on the beet-sugar subsidy, and what do they say? We have had from them an unequivocal condemnation of the subsidy on the ground that it is wasteful and uneconomic. Then we have a third
member of that Committee. I think that any intelligent person could have written that Minority Report in a couple of days without hearing any evidence at all. What is to be the position? Are we going to pursue a policy of subsidising industries when they are in difficulties? The right hon. and gallant Member for Ripon (Major Hills), in replying yesterday to some observations made by my right hon. Friend the Member for Darwen (Sir H. Samuel), asked whether my right hon. Friend was not aware that this subsidy has prevented many farmers from going bankrupt. I believe that the Financial Secretary to the Treasury also said something to the same effect last night. Is that the principle that the Government are to act upon in future? Are we to understand that whenever the representatives of an industry say they are failing, going into bankruptcy, and cannot carry oh, the Government will come along and give them a subsidy?
It is time that the House came to grips with some sound principle, on which subsidies, if given at all, are to be granted. For example, I represent a constituency which is in the main agricultural with a large number of sailors, some of the best in the world along the coast, hundreds of whom are unemployed. In the northern part of the constituency there used to be a lead mining industry which employed thousands of miners. It has ceased to exist; it was a derelict area, a distressed area, long before we ever heard of distressed areas. Why? It was because the cost of producing the lead ore was too high to enable it to compete with lead ores from other regions. But if this House will give me a subsidy for every ton of lead produced I can make those mines pay to-morrow. Are the Government going to accept the principle that if it can be proved that an industry can be revived, not whether it will be economic and able to stand on its own feet in a few years, a subsidy is to be given? Where are we going to end? Are we to say that the lead mining industry is justified in coming along, because it cannot compete with the production of lead in other countries and asking the Government to provide a subsidy?

Mr. GUY: In the case of lead mining, would the hon. Member support a tariff on imported ores?

Mr. EVANS: A tariff on a raw material like lead is absurd. It would place the users of lead at a great disadvantage as compared with their competitors in other countries. I have never known any country which has been in favour of placing an import tax on ores which are used in manufactures. Although America, which has done some foolish things, put a tax on copper, no industrial country would ever suggest putting an import duty on ores and virgin metals. I am asking the Government to declare their policy about subsidies. Will they lay down the principle upon which subsidies will be given in the future? If a subsidy is to be given to an industry which is admittedly uneconomic and will never be able to stand on its own feet, what reason is there for refusing to give other subsidies? The coal subsidy was given and withdrawn and was followed by the general strike, but why withdraw the subsidy on coal and subsidise beet-sugar? The Chancellor of the Exchequer has to provide large sums of money for subsidies to certain industries. It is the policy of what is known in America as the pork barrel dip. Everyone comes along and dips into the pork barrel. Are we coming to that, or can we be assured that if a subsidy is given it is only as an emergency measure and because a particular industry is going through a serious time and that in more normal circumstances it will again become economic. I appeal to the Financial Secretary to give us some idea what the policy of the Government is going to be in regard to these subsidies.

8.20 p.m.

Mr. GEORGE GRIFFITHS: This is the first Budget Debate to which I have listened. The Chancellor of the Exchequer certainly opened his speech on a very joyful note. He spoke with confidence about the prosperity of industry and told us how he came to the idea of this prosperity. He told us about the people sweetening their lives with 80,000 cwt. more of sugar, about the tea they drank, and pointed out that they had drunk this year 270,000,000 more pints of beer. As I listened to the Chancellor of the Exchequer, I thought that he did not seem to understand much about mining. The annual report of the Mines Department
has just been published, and I find that, whereas in 1929 there were 969,000 miners working in the industry, the latest figures for December, 1934, are 737,960, or a reduction of 241,000 men. That is what the Chancellor of the Exchequer calls prosperity. He says that we have got back 80 per cent. of our prosperity. On this basis, it means that if we get back the remaining 20 per cent. of our prosperity we in the mining industry will then have 300,000 fewer men employed than in 1929. I am looking at it, not from the coalowners' standpoint or the royalty owners' standpoint, upon which I propose to say a few words and tell the House how far they are on the back of the miners.
There is nothing in the Budget about the mine worker. In 1929 the miner produced 21 cwt. of coal per person, per shift, not the men at the coal face, but everybody engaged in the industry. In 1934 they produced 26 cwt. per shift, per person, or five cwt. more. Everyone would think that such figures would mean prosperity to the mine worker, but I find that in 1929 the miner earned 10s. 10½d. per shift; to-day he is earning 9s. 1.24d., or 1s. 9d. per day less, while producing five cwt. of coal more than he did in 1929. The division I represent, Hems-worth, is not like that of the hon. Member for Weston-super-Mare (Mr. Orr-Ewing). He said that the Budget would help his constituency, because it was a place to which people flew after they had got sufficient money to live on until they died. In my division the people who are working have hardly enough money to go to the seaside for half a day, never mind about going there to retire.
The Chancellor talked about our having reached 80 per cent. of prosperity. I had some letters this morning from my constituents. They said: "George, if you have a chance to speak at all, ask the Chancellor if he knows anything at all about the Hemsworth Division. We have seen no prosperity in our division since this Government came into office." Take the case of Yorkshire. In Yorkshire in 1929 there were 170,200 persons employed in the mines. In December, 1934, there were 138,800, or 31,400 fewer. Yet we are told that there is 80 per cent. prosperity. Not only are people out of work, but there is something more vital. The people who are in work are working less time.
They are averaging four days a week, which at 9s. ld. a day is 36s. 6d. a week. That is before "stoppages" are taken off. On an average a man takes home about 33s. 6d. a week. Yet we are ringing the bells in this House; prosperity is not round the corner, it is marching four deep up the main street, for we have reached 80 per cent, of prosperity.

Mr. LOGAN: What do they do with all that money?

Mr. GRIFFITHS: My hon. Friend asks me what they do with all that money. The majority of them are starving. You have only to go into their homes and you can see that. But while the miners have had a reduction in wage for an increased output, the mine owner has not done very badly. I shall not quote my own figures, but figures published by the Secretary for Mines last week. The royalty owner never goes down a. pit. There was once one of them who went to look at a pit, and when they showed him the hole he said: "I am not going down there until there are windows to enable me to see." The royalty owners took last year £1,840,594. Every time a ton of coal was drawn up they drew 5.86 pence or 6d. a ton. They drew more profit than the coalowners drew. The coalowners come next on the list. They drew £4,128,199. In other words, on every ton of coal raised in the British Isles the owners made a profit of 5d. a ton. The figures vary for different districts. Some of the districts made a profit of 1s. per ton. Three districts made a slight loss per ton.
If the industry were State-owned—I do not use the word "nationalised" now, because a lot of people when they tried to swallow the word "nationalised" found that it choked them; it frightened them—if the mining industry were publicly controlled, instead of more than £4,000,000 going to the coalowners and instead of some districts showing a, loss, the industry would show a profit. I am sorry the Chancellor of the Exchequer is not here, but he has a fairly good understudy who can manage all right. I want to speak of this prosperity idea. I am glad that the hon. Member for Kilmarnock (Mr. K. Lindsay) is present. I was pleased to hear the theory that he put forward on pensions. At the pit at which I worked until I came to this House the workmen had a pension fund which
had been in operation for over 25 years. We stopped some of the money of the men who are on four days a week. The fund is paying to 125 old men 4s. a week every week of the year. The miners have been doing that for over 25 years out of their own wages, in order to help their old colleagues who cannot pursue the industry any longer and who need the money to supplement the 10s. a week State pension. There are some couples who get only the 10s. a week from the State for the husband, because the wife was not born quite as early as the husband, and husband and wife have to wait for the second pension to become due. Of course they are among the people to whom the hon. Member for Kilmarnock referred, the 201,000 who are being assisted by the public assistance committees. But at the colliery I have mentioned the workmen themselves without any assistance from the owners have provided this fund. I hope that the hon. Member for Kilmarnock will push his theory that the pensions shall be raised, if not to £1 a week, then to something far better than the present figure.
It is said that this is an electioneering Budget. If so, there is a poor look-out for the Government. Very few of the folk in my constituency will get any remissions under this Budget, but, apart from that consideration, the time is overdue for a reconsideration of the pension given to old people who are not following any employment. There is another. point. Old people in that position want homes in cottages of their own. I am pleased to see that a number of local authorities are waking up to that fact and, with the aid of the £5 subsidy, are putting up small houses exclusively for old age pensioners. We have 14 cottages in the area of my own local authority and the old age pensioners who have got these cottages have said to me: "We feel that we are in heaven now that we have got these comfortable nicely fixed cottages."But where a few have got these cottages thousands of others have to pay 50 per cent. of their pensions in rent and that means starvation. Hon. Members opposite are fond of throwing out their chests and proclaiming that we are paying £490,000,000 for social services. Who is paying it? Nearly 50 per cent. of it—a sum of £223,000,000—is paid by the workers out of their wages in contributions. Hon. Members talk as if
it were all being paid out of taxes, but the credit for about 50 per cent. of it is due to the workers.
It has already been pointed out from this side of the House that there is nothing in the Budget to relieve people who are under the means test. When the Government came into power they said that the means test was a means of economy. Remember that it is a household means test and not a personal means test. The hon. Member for Withington (Mr. Fleming) last night said he believed in a personal means test but he only believes in it for the other fellow and not for himself. If there is to be a personal means test for an employé why not apply it to everybody. When we consider a pension of £5,000 a year to a man who has to serve the Government in some position or another, why should we not first apply to him a means test to see whether he requires it or not? A certain man who has now passed away and gone to regions above, left £95,000 and during his life he drew in pension £95,000. He drew a pension of £5,000 a year for 19 years. That is a recent case. If the means test is to be applied in respect of unemployment benefit, let it be applied in respect of pensions like that. When hon. Members opposite are prepared to apply it first at the top, there will be more justification for applying it to the people below.
The means test touches not only the man who is on the Unemployment Assistance Board's scales but also the single young man who is living at home and who has to pay taxation if he is earning above the taxable limit. He has no chance at all. When that young man's father goes before the officer of the Unemployment Assistance Board, the first question he is asked is "What income is coming into the home?" If he replies "Our Jack is earning £2 10s. a week and he pays me 30s. a week" they say to him "It is not what he pays to you, but what he gets, that we put down in your case." Then they put that boy's earnings at the full amount of £2 10s. or £3 or whatever it may be. That young man is possibly also maintaining his mother and if there is another lad in the home earning anything up to £2 a week the chances are that the father will get nothing under the scale. When the same young man applies for some redress in the matter of taxation it is another story. The taxing
authorities ascertain his earnings from his employer and he gets a demand note and he has to pay Income Tax as a single man. When his case is before the Unemployment Assistance Board he is in the same position as a married man in the sense that he is supporting his mother and his father but when he asks for redress from the Income Tax people he is treated as a single man. He suffers both ways. I have had applications from young men in my division who have been compelled to pay Income Tax although they were helping to keep their own people.
The employed contributor has paid his share in connection with the economy stunt. Prior to 1931 he paid 7d. a week. Now he pays 1s. a week or an increase of 42 per cent., and there is nothing in the Budget to deal with his case. The Chancellor of the Exchequer said he was dealing with the small man but he has not dealt with the smallest man of all, the man who does not earn sufficient to become liable for tax but who has had 42 per cent. added to his contributions. The hon. Member for Caerphilly (Mr. Jones) told us yesterday that that has brought in during three and a half years an additional sum of £21,250,0000. The people in my division which is largely mining, with some railway workers, want to know when these contributions are going to be restored to the figure at which they stood previously.
I ask the Chancellor of the Exchequer at least to give consideration to these questions of the family means test as it is now being applied and the position of the young single man who is bearing the heat and burden of the day in supporting his people. The right hon. Gentleman said he was trying to encourage our people to breed a better species of humanity. That is what he meant. He suggested that there ought to be more children so that when the Colonies asked for them, we should be able to send them people of the right type. If he keeps these burdens on these young men whose fathers and mothers have been the mainstay of the race of to-day, instead of encouraging that ambition he will stifle it and they will follow the theories of the middle class and the upper class as regards the size of families.
I am putting the facts across the table in my own homely way. I am not discussing the Gold Standard theory or the sterling theory. I leave that to the experts. The only thing I know about the Gold Standard is that I suffered 32 weeks fighting the coalowners because the right hon. Member for Epping (Mr. Churchill) restored it when he was Chancellor of the Exchequer. It cost the coal-owners from 2s. to 2s. 6d. a ton on their export coal, and then they said that it was to come out of the miners' wages. We said "No," but we lost the battle, and we had to go back to the old rates of wages. I know what the Gold Standard meant to me: it almost meant eating grass, and I have never had any great fancy for it from that day to this. That was almost the cause of the mining industry being in the condition in which it is to-day. I hope that the Chancellor of the Exchequer will pay attention to the means test; to giving the young man at home some encouragement if he is helping to keep the home going; and to the reduction, of contributions. I hope, too, that when the country gets back to 100 per cent. prosperity our chaps, while they are producing so many cwt. of coal more per shift per man at the pit, will, instead of getting a reduction in wages of 1s. 6d. a day, get an increase. Then they will get more sunshine than darkness.

8.47 p.m.

Mr. GUY: I do not propose to reply in detail to the speech to which we have just listened, for I would not deprive the Chancellor of the Exchequer of the opportunity of scoring some obvious points. I cannot, however, resist the temptation to reply to one or two points that the hon. Member has made. The hon. Member jeered at the statement made by the Chancellor as to the recovery of 80 per cent. of our prosperity. The Chancellor did not say on what standard that statement was based, but I think it would be reasonable to say in reply to the hon. Gentleman that if we have 2,000,000 unemployed to-day we have 10,000,000 employed, and that indicates that there is a substantial measure of employment in the country. That, coupled with the other figures which the Chancellor gave us of the production returns, the Post Office returns, the railway returns and the increase in the revenue of the country, is a very clear
reason for his saying that we have very largely returned to something like normal prosperity. With regard to the family means test, the hon. Member seems to be very indignant, because, he says, it is not applied outside the ambit of unemployment insurance.

Mr. G. GRIFFITHS: I was not indignant about it at all. All I said was that I did not believe in the means test, but that, if it was applied, it should be applied to everybody and not to some.

Mr. GUY: I withdraw the term "indignant." "Petulant" is probably more appropriate. The hon. Member's grievance was that the means test was not applied all round, but he forgets that a direct means test is applied to all those who pay Income Tax. Not only do those who are in receipt of public money have to undergo a severe investigation into their means, but those who contribute by Income Tax to the national revenue have also to undergo a strict investigation of their means.
I would like to add my word of congratulation to my right hon. Friend the Chancellor of the Exchequer on the very satisfactory and reassuring Budget statement which he gave to the Committee on Monday. It was the fourth Budget statement we have had from, him in this Parliament. Each Budget in turn has been balanced, and each statement has made it clear that he has relied on the principles of sound economy. As each Budget follows its predecessor, it becomes clearer that there is less necessity to adhere to the emergency principles of 1931, namely, increase of taxation and economy cuts. There is no doubt that the Chancellor has utilised the surplus in his hands in the wisest possible way. I was very glad, and I am sure my feeling must have been shared by all hon. Members, that he adhered to the principle in distributing his surplus of giving the greatest measure of assistance to those who suffered most in 1931 by economy cuts. He also adhered to the principle, which is a sound one in connection with the process of recovery, that any relief of taxation should be calculated to restore trade and industry by normal methods. The ½10,000,000 relief of taxation will result in an increase in consuming power among a large number of individuals in the community, and thereby the process of
increasing trade and industry will be improved.
My congratulations to my right hon. Friend are tempered by one note of criticism. I would like to endorse the criticisms which have been made by other hon. Members of the raid upon the Road Fund. The Financial Secretary last night stated that, as a matter of fact, the Minister of Transport had never had the free disposal of this Road Fund. That is true to-day, but, if the Financial Secretary would read Section 3 of the 1920 Roads Act, and the speech made on the 2nd December, 1920, by the Parliamentary Secretary to the Minister of Transport when winding up the Debate on the Second Reading of that Measure, he will see that there was a definite statement that the Road Fund, when it was set up by that Act, was earmarked for road development and for that purpose only. There was no doubt in the mind of Parliament when that Act was passed that the only Treasury control at that time was over the regulations made by the Minister of Transport for the accounting of the Road Fund and for the investment of any surplus. We are a long way from that position to-day.
As the years have gone by the Treasury have not only taken more from the Road Fund but have exercised greater control. This surplus of £4,500,000 which has been transferred by the Chancellor from the Road Fund to the Treasury would not have been there had it not been for Treasury control over the expenditure of the Road Fund. It is quite clear that since 1931 there has been a definite slowing-up of road development schemes which could have been financed out of the Road Fund. We have now got away from the need for drastic economy. The Minister of Transport has announced his five-year plan, which is to be approached after the local authorities have submitted their schemes, very largely from the point of view of road safety. There is not only the employment point of view but also the point of view of road safety, which is connected with the tragic figures of road accidents. In my opinion it is most important that this road development scheme should not be hampered in any way by the restriction of the Road Fund. If the question were put to me, "Would I prefer that this money had been left in the Road Fund rather than distributed in
relief of taxation?" there could only be one answer. Of course, there is ample justification for the utilisation of this surplus at the moment, but I make a special appeal to my right hon. Friend that, if the schemes come in from the local authorities and there is a demand for an increase in expenditure out of the Road Fund, he will be careful not to cramp those road schemes by withholding from the Ministry of Transport the necessary finance.
I have in mind a particular scheme which is of considerable interest to the East of Scotland, and that is the proposed road bridge across the River Forth. At the moment we are awaiting the completion of certain borings and soundings, so that an agreed scheme can be submitted to the Minister of Transport for his approval. I hope that will be done within a few months. That scheme is estimated to cost some £4,000,000. This money which was in the hands of the Minister of Transport might have been earmarked for a large proportion of the cost of that scheme. Opinion in the East of Scotland is virtually unanimously in favour of the scheme, and pressure has been brought by local authorities and associations upon the Ministry to proceed with it as soon as possible, and I do hope that my right hon. Friend will regard that proposal with favour whenever the opportunity arises for him to consider it.
I have one other word to say on the Road Fund. I wonder whether the Committee have realised how small is the proportion of the Road Fund which in recent years has been expended on actual road development schemes. During the year ended 31st March, 1934, out of a total revenue of £31,000,000, only £11,800,000 was expended on road development schemes and major road improvements. Not only did the Treasury take some £5,000,000 out of the fund but £6,000,000 went to the local authorities under the Local Government Act, 1929. I do not wish to weary the Committee with details, but there are quite a number of other items which absorbed a good deal of money, such as the expenditure on the Roads Department of the Ministry of Transport, the London Traffic Committee, Traffic Commissioners, motor patrols and administrative expenses. In the result, only about
30 or 35 per cent. of the total income was expended upon the purpose for which the Road Fund was set up in 1920. Reference has been made to this particular raid of £4,500,000 on the Road Fund, but that is not the end of the raids, because when one considers what has been done by the alteration of the duty on crude oil for vehicles propelled by Diesel engines it becomes apparent that the reduction of the vehicle duty to the same level as the duties paid by petrol engine vehicles means that there is a further loss of some £440,000, which falls upon the Road Fund. The Diesel engine vehicles have to pay 8d. a gallon tax instead of ld. per gallon on their fuel, but that additional revenue does not go to the Road Fund but to the Treasury so that there is this additional cut which, in my opinion, is rather unfortunate.
On one other point, that of pensions, I found myself in considerable sympathy with the hon. Member opposite when he was dealing with the question. His criticism of the Budget statement, like so many other criticisims, was not levelled against anything in the Budget statement but rather against what was not in it. In reflects most favourably on the Budget statement that so little criticism has been directed against what is in it. The various suggestions put forward for raising pensions, if they are to be non-contributory, would be quite out of the question from the taxpayers' point of view. If I remember aright, it was estimated some time ago that the cost of paying pensions of £l a week to every person over 60, if they were on a non-contributory basis, would be in the neighbourhood of £120,000,000. I venture to hope that when the question of contributory pensions is reconsidered, as I hope it will be at any early date, the Chancellor will favourably consider a widening of the field of contributory pensions, and in particular that he will regard favourably one class of the community who so far have not been organised and so far have not put forward their grievance—I think they have a genuine grievance—and that is the class of the unmarried insured woman. Many of them can only receive their old age pensions or their payments under the National Health Insurance scheme at the age of 65, but for one reason or another they may drop out of insurance
before they reach that age. The cost of making the reduction in age would be a matter for the Government actuary to determine and for the Chancellor of the Exchequer to consider. In my opinion, reduction of the age from 65 to 55 for that class would be only an act of justice.
The Chancellor's Budget has been described as an electioneering budget, hut that criticism, if it be a criticism, only indicates the popularity of the Budget, and indicates also that on their financial record the Government need not be afraid, now or at any time within the next year or 18 months, to go to the country and ask for a mandate for another period of constructive legislation.

9.6 p.m.

Mr. ANNESLEY SOMERVILLE: I want to refer briefly to the remarks made by the hon. Member for Cardigan (Mr. D. Evans) upon the subject of beet-sugar, but, before doing so, may I say a word about the attitude of hon. Members opposite. They are discontented because other people are contented. There is not the least doubt that there is considerable pleasure throughout the country at this Budget. I have spoken to a good many men and women of different sorts and conditions about the Budget, and they all say that it is good. Only this morning one man said to me: "If you have an opportunity, will you tell the Chancellor that at least one bank clerk is very much obliged to him?" Listening to the speeches of hon. Members opposite, I could not help thinking of the years 1930 and 1931. When they spoke about sound finance and about nothing being done for unemployment, I remembered those weeks when we were in such a state of anxiety, and the Socialist Minister of Labour was coming to the House every other week for a further loan of £10,000,000. They say nothing has been done for unemployment in the Budget. Do they forget their own principle, of which they speak so much, of increasing the purchasing power of the people? What has the Chancellor of the Exchequer done but very materially increase the purchasing power of the people by restoring the cuts, abolishing the greater part of the Entertainments Duty, and so on, at a total cost of £10,000,000?
I listened to the hon. Member for East Fulham (Mr. Wilmot) trying to make out
that practically nothing had been done for the smaller people. He was well answered by the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) who asked him where, if that was so, was the £10,500,000 going which had been advanced? Hon. Members spoke about the increased cost of armaments. Will they answer these questions: "If you were responsible, would you spend that money on armaments or would you not? Do you agree with your own First Lord of the Admiralty, Mr. Alexander, and your own Minister of War, Mr. Tom Shaw, who both said that we had come to the limit of unilateral disarmament? "Hon. Members should be honest and answer the question: "Would you, or would you not, spend that money?"
With regard to the beet-sugar subsidy, we have to remember that the difficulty is largely caused by the subsidy paid in other countries. I have read the report of the Beet-sugar Committee, and what struck me was that two-thirds of the majority report gave excellent reasons why the beet-sugar industry should be maintained, and the rest of the report gave reasons, which were not nearly so conclusive, why the subsidy should be withdrawn and the beet-growing part of the farming community should turn their attention to other classes of farming. The farmers in my constituency do not grow beetroot, but they produce milk very largely. We must regard the farming industry as a whole. If farmers in one part of the industry turn their attention from growing beetroot to producing milk, their action acts with, as it were, hydraulic pressure on the milk industry in all parts of the country. One of the biggest difficulties in the milk industry is distribution of the surplus milk. If the production of milk is increased, that difficulty is also increased.
The beet-growing industry has come to stay, and we must look at it from the national point of view, especially with regard to the employment it gives, not merely directly in the factories and on the land but in the subsidiary industries, and to the demand that it causes. I do not want to dogmatise as to whether the industry should be kept in being by subsidy, tariff, or by other means, but I say that the industry has become essential to the country, and that it ought to be kept in being. The Chancellor told us that the country has regained 80 per cent.
of its prosperity. If he continues steadily and successfully in the course that he has marked out for himself, the country ought shortly to regain the remaining 20 per cent.

9.14 p.m.

Sir G. GILLETT: Before I mention the Budget, I would like to refer to remarks which were made by the hon. Member for Central Edinburgh (Mr. Guy) about the Road Fund. It is an open question whether it is desirable to keep the Road Fund in existence. I do not know that there is justification for money collected from one special source being used necessarily upon the roads. In view of the fact that the right hon. Gentleman has taken some of the Road Fund money, as previous Chancellors have done, the principle of the Road Fund might just as well be swept away. I do not understand why the amount of money that is spent upon the roads should be dependent in any way upon a special tax. There might come a time when road expenditure would justify a larger amount than is received from the tax on petrol. Experience has shown that the amount of money received has not been required to be expended upon the roads, and a time is conceivable when the money which has been collected by that tax might be better expended on some other social service, such as education. We might come to a time when grants in that direction have been increased, and expenditure might be such that it would be better to meet it at the expense of the roads rather than at the expense of some other services. The Chancellor of the Exchequer might very well consider whether the time has not come to abolish the Road Fund and to let the roads stand with other services and the amount of money received go to the general funds. If that were done, all the difficulties that various Chancellors have in regard to taking money from the Road Fund for other purposes would automatically cease to exist.
I do not think the Chancellor has much to complain of in the Debate that has taken place in connection with the Budget. He has received congratulations even from Members of the Opposition. One hon. Member on the Labour benches informed us to-day that he did not see what better could have been done with
the amount of money available than the Chancellor had done. It is true that in a flight of eloquence he ended by telling us that he did not think the Chancellor's finance was sound. I thought, however, that the usual criticism from that, quarter was that the Chancellor's finance was too sound, and that the desire was that there should be a greater expenditure of money and the use of the national credit in other ways than we see to-day, But I think that possibly the hon. Member, in saying that, was carried away by his own eloquence rather than thinking exactly what he was saying.
My own feeling about the Budget is that it practically terminates a rather interesting series of Budgets. What the Chancellor set out to accomplish he has almost finished. Most of the cuts and other methods of procuring money that it was found necessary to institute in 1931 have now been annulled. It is true that certain of the social claimants have not yet been considered, and it is also true that the smaller Income Tax payers have not yet received back their full allowances. On that matter I might say that I thought the speech of the hon. Member for East Fulham (Mr. Wilmot) was rather unfortunate. I think he must have been dealing so much with the pepper scandals that a little of it has gone to his head, and that he could not see anything or anyone except through pepper spectacles, and naturally concluded that in dealing with the Chancellor he was dealing with some of those against whom he is waging war in connection with the problem of pepper speculation.
At any rate, I do not think he strengthened his case by the language he used about the Chancellor, and that his case would have stood better alone than with the embellishments that he added to it. Indeed, one could almost accuse the hon. Member himself of rather twisting his arguments. At any rate, if what the Chancellor said was in any way in the nature of twisting, the hon. Member for East Fulham could equally be accused of twisting. As a matter of fact, I think they were both correct. I cannot think how the hon. Member could have thought that the Chancellor had suggested at any time that his proposals with regard to Income Tax allowances were going to replace fully those that he had taken away. None of us who knew what was the amount estimated to have been taken
from the Income Tax payers as a result of the removal of these allowances could have imagined, when they heard that the sum estimated by the Chancellor was £10,000,000, that he was in any way replacing the whole amount.
The first great work that the Chancellor has done has been in connection with the debt services. What our position would have been to-day if he had not carried out those great conversion schemes, and if his financial policy had not led to the enormous reduction in the debt services, it is difficult to imagine. Whether he will be able to do anything more remains somewhat problematical. Although the right hon. Gentleman most carefully said that his proposal with regard to Local Loans was not to be so interpreted, it has been interpreted in the City as meaning that he foresaw such a very long period of cheap money that the Local Loans stock would rise to a figure which would justify him in carrying out the conversion scheme which he is now taking powers to carry out should the opportunity offer. That, in one sense, is rather a sad outlook for those who are concerned with the trade position of this country, because, if easy money is going to continue for so long, one naturally begins to wonder whether the increased trade activity that we are looking for is likely to take place. At any rate, I hope that it will not in any way divert the attention of the Chancellor from two great subjects which especially come before him. Both of them have been mentioned, one especially.
The first is the question which the hon. Member for East Edinburgh (Mr. D. Mason) so faithfully brought before us to-day, namely, the question of the exchange position. I agree entirely with him and other hon. Members, but I think that the outlook for Europe and for the world is most serious in view of the fact that we may easily be commencing a money war with regard to the exchanges. There are two aspects of that matter which I think possibly have not been mentioned. I am sorry that the hon. Member who spoke just now from the Labour benches is not here. He told us that we suffered from. the gold standard. It was not, however, the gold standard from which we suffered, but the mistake in the management of the gold standard. I should have liked to
point out to him that it was very interesting, when Belgium went off gold a week or two ago and immediately went back to gold at a new figure, to note that in the Belgium House of Representatives the chief party that supported the Government in regard to going back to gold at once, and not allowing their money to be left without some connection with gold, was the Socialist party. That might have interested the hon. Member. He might have begun to see that possibly the gold standard is not quite so evil if it works satisfactorily—which of course is the problem to-dayas it had been when it was working unsatisfactorily, and when, he rightly said, we suffered from it.
The other point with regard to the exchanges on which I should like to lay stress is that, although we have talked a great deal about the danger to ourselves, we are to a large extent, as we are placed to-day on the sterling exchange, in a fairly favourable position. The countries which are suffering to-day are those which are linked with gold, as we all recognise. Sometimes I think there is a little danger of our feeling that we ourselves are so well placed that we need not trouble too much about those other nations, but we have to remember that, as the greatest exporting nation in the world, we live on the prosperity of other people, and the fact that France, Italy, Belgium, Holland, and other nations are to-day in a very serious condition is to my mind a serious question for ourselves. The Chancellor will recognise that on this matter one cannot speak at all freely, and I can only say that I hope he recognises that, so far as Europe is concerned, the position which he occupies is the leading one, and that it is only from that position that he can give a lead to Europe. An hon. Member in the debate to-day said that it depended largely upon ourselves what was done in regard to this matter. I am afraid that it does not depend upon ourselves, but largely upon the President of the United States. As I said in the House a short time ago, it seems to me that the matter is one of very serious importance.. I notice that the hon. Member for East Edinburgh suggested to one of the hon. Members on the Labour benches that we might have benefited by cheaper commodities if we had remained on gold. I think he has
overlooked the fact that the crisis in Belgium was due to the deflation attempted in order to force down prices. If we are going to be on either gold or sterling, it seems to me that we are far better on sterling.
If we consider the international position, both in our own interests and the interests of the other nations, it seems to me the condition of the unemployed is going to be more effectively helped by a revival in international trade. Many of the speeches to-day have pointed out, that although our position is satisfactory, we are approaching as far as we can see the level on which high taxation is impossible. If things got worse and we began to find our income was not coming in, the position might once again become grave. That is why I say that anything the Government can do to stabilise the exchange should be done. I think the most effective way is to get the other nations to return to the Gold Standard. This is one of the most urgent needs of the day.
The question of subsidies was referred by hon. Members sitting on the Liberal benches. The Chancellor of the Exchequer has given us, thanks to the confidence he has inspired, a sound financial system. The question is how far can it be used to-day in order to remove the evils that are so prevalent among us? The hon. Member who spoke from the Liberal benches criticised very severely the question of subsidies. What is the difference between a subsidy on wheat or sugar beet, if you really come to the foundations of the scheme, and the proposals that are being made in the New Deal scheme of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George)? Hon. Members referring to subsidies said that the advantages and facilities would be sought for by Members for their own constituents. If you are going to have large road schemes and drainage schemes such as are proposed, I understand, in the New Deal, we shall at once have the same applications from Members that the schemes should be carried out in their own constituencies. That argument cannot be avoided, and is not one of very great importance. Is it any worse to give the money in subsidies than to provide money
for roads or drainage schemes? It seems to me the difference is very small.
Take the beet-sugar industry, which is very much discussed to-day. I was in the House when the first proposals came up. It was very strongly supported by the leading members of the Labour party. One of the strongest supporters of the subsidy was the first Labour Minister of Agriculture, the present Lord Noel-Buxton, and many, owing to his arguments, were persuaded to support it even at a time when back bench members of the Labour party were criticising it. I was in Norfolk recently and asked someone how things were in the agricultural world there, and he said that thanks to the wheat subsidy and sugar beet they were doing very well. The wheat subsidy was granted in view of the need to help agriculture, and in view of the desire that the country should continue to grow wheat. The beet sugar subsidy may have been excessive, and perhaps more control ought to have been kept over the factories. Is there any reason why the credit of the country should not continue to be used in this way if you are really going to help industry in its time of need?
One hon. Member has asked whether a lead mine ought to be granted a. subsidy. I am not at all sure that if you give 3,000 men work by so paying a subsidy there is any objection to doing so. It would save providing them with money from the ordinary relief pay or setting them to work to make roads which, perhaps, are not very much wanted. I think that, having secured as far as we can our financial position, it is imperative that we should not rest satisfied, and think that everything is as bright as we think it ought to be. It is absolutely essential that we should do everything we can to help our international trade, and it is obvious that the owner of capital is very loath to invest even at home. It may be imperative that to some extent the Government may have to step in and try to make use of the unused capital. What would be the best way of doing so is a large subject with which I shall not delay the Committee at this time.
I congratulate the right hon. Gentleman on what he has done, and the way the various cuts have been restored, and I hope now that he will be able to proceed
with what seems to me a far more difficult subject, and a far greater subject, that of helping international trade and seeing how the credit of the nation can be used to solve the problems of unemployment.

9.35 p.m.

Mr. DORAN: May I take this opportunity of extending to the right hon. Gentleman the Chancellor of the Exchequer my very hearty congratulations on a most excellent Budget, which, I venture to say, has received the approval of the majority of the people of this country. May I further say that I wish to congratulate him on his foresight, his imagination, and his wonderful endeavour in trying to restore this country and place it on a pedestal of prosperity to which no other country in the world can lay claim to-day. I am not concerned so much about the Chancellor's Budget, because I feel that more able minds and far greater brains than ever I can lay claim to are able to do more than justice to this wonderful Budget of 1935. I am going to leave it to the experts to go into all the details and to analyse the pros and cons of the Budget, feeling confident in my own mind that the wisdom on this side of the House will at least prevail and demonstrate to the world that at last we have got a business Government with imagination who are going to bring prosperity to the British people. I am not a financial expert and have never pretended to be, and, if anyone in this House asks me to delve into the nooks and corners and crannies of this wonderful Budget, I must inform everybody that I am totally incompetent to undertake such a task.

Mr. LOGAN: Hear, hear

Mr. DORAN: The hon. Member says "Hear, hear."

Mr. LOGAN: I said, "We agree."

Mr. DORAN: He repeats "Hear, hear." If anybody in this House cares to look at him, he will know full well that he is not all there. I am going to try, if possible—I know that I have a frightfully difficult task—to keep within the Rules and. Regulations of this House, for I invariably break them, and it is because I break them that I am able to find out what the Rules are. I should like to see many hon. Members emulate
my example. To-day in this House I have listened to the usual whining and denouncing terms of Members opposite. The first thing they seem to think about is the means test. You people on that side—I must say, these people on that side, for I realise that I am speaking through you, Captain Bourne—have come to this House whining about the means test. They have shed the usual crocodile tears for the poor and unfortunate unemployed.

Mr. LOGAN: Speak up.

Mr. DORAN: If you want me to speak up, it is only a proof that you are intellectually deficient. Perhaps if I shout at you, I shall be able to penetrate your intelligence, but that is only by the way. I advise you not to interrupt, because if you do, you can take it from me, you will get more than your measure. I have had people like you to deal with, and you are so easy and so simple. As a matter of fact, you are only a mere interlude. Captain Bourne, this is where we are going to give these fellows an Easter egg to go home with, and I hope that when they get to their constituencies they will not find that it is addled.

Mr. LOGAN: We shall be sober when we get there. [HON. MEMBERS: "Order."] What is the "Order" about. Should I have said that we should really be drunk?

Mr. DORAN: I am speaking with a great measure of intelligence, and in intelligible English. If you are the kind of type who has never had the courage to take a man's drink—and I say that I have taken a man's drink; thank God I was not brought up on lemonade—if your parents brought you up and fed you on bilge water, I can understand why you are a Socialist. Independent of these interruptions, I have listened very religiously for nearly six hours yesterday and for nearly five hours to-day to the observations which have been made by Members on both sides. I am not pretending for one moment that this Budget is a paragon of excellence. I have never said that it is going to supply Elyseum for the people, and I have never pretended at any particular time to say that this Budget is going to be the last word in an endeavour for real definite social reform on behalf of the millions of this
country. All I am saying is that after three and a half years of tribulation, sorrow and woe throughout the length and breadth of the world, after going through the maelstrom of international politics, and after weathering the high seas of international and national discontent, I raise my hat to the Chancellor of the Exchequer as the one pilot who has brought the ship safe into a port of safety and given at least a little security to the crew. The Chancellor of the Exchequer does not want me to praise him. He does not ask for any emoluments from me. I am not paying him, and he is certainly not paying me. He does not want me to cover him with any kind of glamour or praise, and he does not want me to try and put him into the sunlight of public approval which he now enjoys. He has received all this independently of humble people like myself.
I am concerned about the people opposite to me to-night. They have spent the whole of their time and have used all their endeavours in the most vituperative denunciation it is possible for human language to concoct. Now I am going to ask you delightful boys a few questions. I am speaking quite intelligible English, and whether you like it or whether you do not makes not the slightest difference to me. I am going to tell you what you are. If you do not like my description of you, then you can just simply lump it. You have been shedding crocodile tears on behalf of the working men. You have denounced the means test, which you yourselves imposed. You have denounced the wage cuts, which were carried out according to your own recommendations. You have endeavoured to sow the seeds of discontent, yet you have been the last people in the world really to endeavour to sacrifice your own party interests. I have before me a very delightful example of your methods. I hope, Mr. Deputy-Chairman, that when I speak in this way you will realise that I am speaking to the people opposite. Let me say this to them. "What did you do in January, 19351" The hon. Member for Ebbw Vale (Mr. A. Bevan) will bear me out in this; the hon. Member for Aberdare (Mr. G. Hall) and the hon. Member for Rhondda Valley will also bear me out. In January, 1935, they
started a campaign on behalf of the victims of the dole. They had processions through the streets and raised funds for the victims of the National Government. I am indebted to the "Western Mail," of Cardiff, of 5th March, 1935, for the statement that they came our to find victims—

The DEPUTY-CHAIRMAN (Captain Bourne): A great deal of latitude is allowed in the Debate on the Budget, but I think this is going beyond anything.

Mr. DORAN: I sincerely apologise to you, Sir, which I am entitled to do, and I hope that you will accept my apology, but, in view of the fact that this afternoon I heard a general discussion upon this subject, with references to the dole, I think I am entitled to reply to the remarks made by hon. Members opposite. I have no wish to make a general onslaught in connection with this matter, but I have taken careful notes of the speeches made by hon. Members opposite in regard to the dole, the means test and the depressed areas, and those are the three headings with which I am dealing. Therefore, with all due respect to you, Sir, although I would not care to question your word for one moment, I think I am entitled to refer to the fact that these people went out to get hold of, to find the victims of the dole, the victims of the National Government, but having raised funds they could not find any victims. In other words, what these fellows did was to raise a fund for derelict cab horses, and they found out that there were no horses but only taxicabs. They have returned the money in South Wales to the people from whom they raised it, because they could not find the victims of the dole. Here is the proof, in this newspaper, if they want it.
Now I come to the remarks of hon. Members opposite that the Government have done nothing for the depressed areas. Here is a leaflet that was delivered to me through my own doorway five days ago. It is headed: "Facts that count," and is published by the Labour party. This is what they say, and the figures are true; I am bound to admit that they are true:
Unemployment. —2.325,373 workers were registered as unemployed in Great Britain
on 28th January, 1935. Not only is there mass unemployment for the nation but there is protracted unemployment for the individual.
Listen to your own leaflet.
For example, on Tyneside, and in the County of Durham 63,000 people have been unemployed for more than two years; 40,729,
an so on and so forth. Have these people realised that when they refer to the Tyneside, Durham, Rhondda, Aberdare and Ebbw Vale, they are referring to the very places where the Socialists have been in charge for nearly 17 years, where these people have been manipulating the parochial, social—

The DEPUTY-CHAIRMAN: The hon. Member would be entitled to raise these points in a debate on unemployment, but I cannot see what relation these matters have to national finance.

Mr. DORAN: I can understand you calling me to order, and I appreciate it and welcome it, and I am the last person in the world to turn round and question your authority, but, when these people have said that nothing is being done for the depressed areas, I want to remind them that the depressed areas are things of their own creation. They have depressed those areas. They know full well that wherever their paralysing hand of inefficiency has grasped any industry it has gone into decay and ruin. They have ruined the north, they have ruined the Rhondda Valley, Aberdare, and Ebbw Vale, and they wonder why industry is travelling south. It is because they are only too glad to get out of their clutches.

The DEPUTY-CHAIRMAN: I must remind the hon. Member for the third time that we are not discussing unemployment.

Mr. DORAN: I apologise, but I thought that I would just bring that point home. I will wind up by saying that this afternoon I have heard denunciations of the capitalist class, and I have heard it said that Socialism is the only remedy. The people opposite say, "We are going out to socialise the means of production, distribution, and exchange, to bring about a state of society in which rent, interest, and profit, private property, and capitalist wages will be no more." You
are going to emancipate the workers from the domination of the landlord class and to bring about the dawn of a day when all people shall be equal, free, and alike. As a matter of fact, as Bernard Shaw says, young or old, good or bad, rich or poor, we are all going to receive the same reward, share and share alike, and when this new Jerusalem of social democracy descends upon us, when we have socialised the means of production, distribution, and exchange, when we have eliminated the hated capitalist, when we have established social and political equality between the sexes, believe me, every cab horse in Piccadilly is going to have a chance to win the Derby.
I wish now to refer to a remark made by an hon. Member of this House to-day in regard to hours of labour. He said that we ought to reduce the hours of labour so as to give the unemployed a chance. It sounds very good, but let me tell the Members of this Committee what these delightful fellows would do if they happened to be in our position. I find that Members of the Labour party, as they call themselves, though they never were Labour in this world, and they never will be, because not one of them understands what the word means, are Socialists, theorists, dreamers, men who live on the gospel of impossibilities, wandering stars in the firmament of heaven, clouds carried about by their own wind, shall 1 go further and say raging waves of the sea who foam out their own shame? These delightful boys, these whited sepulchres who always come here shrieking at the top of their voices on behalf of the working-classes, say that a six-hours working day is sufficient. I look at your lists and I find that your Socialism is international, and I see that the Australian Socialists say that a four-hours working day would be ample to meet the mental and physical requirements of the working-class, and the Austrian Socialists say that a three-hours working day would be enough. When H. M. Hyndman debated with Henry Labouchere in 1894, he said that under a well organised scheme of social democracy, when all the means of production, distribution, and exchange would be democratically controlled in the interests of the entire community and the worker would share and share alike with
all the rest and nobody would be any better than anybody else, a two-and-a-half-hours working day would be sufficient. But he was wrong; he was a sweater from your point of view. Mr. J. L. Noble, the leader of the American Socialists —

The DEPUTY-CHAIRMAN: I think the hon. Member's remarks would be better suited to a Debate on the Ministry of Labour Vote.

Mr. DORAN: I will conclude by saying that I did not wish to bring in the Minister of Labour, but that Mr. J. L. Noble said that under a well organised scheme of social democracy a one-hour working day would be quite enough. What I want to say to the Leader of the Opposition is that if he wants to earn for himself undying fame and to hand down his name to posterity as that of the greatest economic statesman in the world, let him come forward to a wondering world and proclaim to that world that under this new Jerusalem of social democracy any man who dares to mention the word "work" at all shall be hanged by the neck until he is dead.

10.4 p.m.

Mr. DAVID GRENFELL: I think I am expressing the views of the Committee when I venture to congratulate the Government on the very loyal support given to them by the hon. Member for North Tottenham (Mr. Doran), who has just sat down and who has shown himself to be so faithful a henchman in the House of Commons. I was rather perturbed when he commenced his speech by his eulogy of the Chancellor and of his Budget, but he went on to say that he wanted to disavow any special knowledge of the subject of finance and any desire to probe too deeply into the mysteries of this year's Budget and into its nooks, cracks, and crannies. That conveyed to me a sense of barrenness and not of richness in the subject of his remarks, and I think there is not any richness and wealth in the Budget in which we can find satisfaction to-night.
The Budget is really, as it has been described in the last few days, a Budget of small items, of small concessions to a very large number of people, and for
that reason it has been described by the supporters of the Chancellor and the Government as a popular Budget. We do not wish to question that description. We believe that the Chancellor has attempted to make the largest possible number of individual concessions to the citizens of this country. What we would like to question is the general scheme of the Budget plans, and, indeed, my first comment would be that there does not appear to be any definite plan in this year's Budget or in preceding Budgets from the Chancellor. There are elements in budgeting which are familiar to all of us, and the elements of this year do not seem to refer to the elements of the last three or four years. On this side of the House, bereft of that personal admiration which carried the last hon. Member to an ecstasy of speech, we do not find that the elements of this Budget can be continued to give satisfaction even to the Chancellor in succeeding years.
Therefore, we believe that this is the last of this type of Budget, and that, it is a Budget that portends an election and a new Government. The Income Tax, Customs and Excise are all familiar figures, and one finds every year when Budget time comes along a considerable number of inquiries regarding the prospects of changes in Income Tax and changes in the duties on various commodities. I think that the Budget gives the Parliamentary occasion of the year when the widest public interest is displayed; a larger number of people in this democratic country of ours display that interest in the few days before Budget day, and the Chancellor is perhaps the centre of more attention than any other politician in the country. The Chancellor has made the utmost use of this publicity. He has presented a Budget which has been drawn up with very great skill, and I confess that he does make clear to the House his intentions in a way unrivalled perhaps by any other Minister. On this occasion he has not disappointed the House; he has shown the same clarity and mastery of detail.
I would like to make some comparisons between this Budget, which is claimed to be a masterpiece of the particular kind of finance represented by the Chancellor, and preceding Budgets. This Budget is one of the largest Budgets that has ever
been provided, and for that reason it is worthy of comparison with the Budgets of former times, especially when we go back to pre-war years when Budgets were much more modest. In 1913 the total amount of money raised in this country for all purposes was £198,000,000. In this year 1935–36 we expect to raise, including the Post Office and the special self-balancing revenue, no less a sum than £824,000,000, so that the sum that is raised and disposed of by the Chancellor in this year is to be more than four times the magnitude of the largest pre-war Budget. That Budget of 1913–14 represented almost exactly 10 per cent. of the national annual income. This Budget, in a, period when the population of this country has grown very much, when our national productiveness has increased very considerably, when our annual income is more than double in comparison, is more than 20 per cent. of our national income.
It is a considerable proportion of the income of this country which comes under the direct control of the Chancellor, and the exceedingly complicated system of which he is the representative in this Rouse. Income Tax has increased from £43,900,000 in 1913 to £232,000,000 in this year's Estimates. Customs Duties have increased from £35,500,000 to £188,500,000; Excise Duties from £39,500,000 to £106,000,000. In these two categories of duties there are now thousands of separate items, each bearing an impost, large or small, according to the duties provided by recent legislation covering the whole field of production and of distribution of goods of all kinds in this country. We are now deriving revenue from almost every kind of commodity which is imported into this country, and from a considerable range of home production. There are the McKenna Duties, the Ottawa Duties, the Irish Free State Import Duties, all covering a considerable range of production. We have Entertainments Duties, new since the War; and we have a number of other very ingenious methods of raising taxation from people in their various pursuits and habits of life.
We have, therefore, departed entirely from the pre-war conditions when Customs duties were confined to tea and sugar, spirits and tobacco, and we have now a multiplicity of duties. But while we have considerably widened the range for the
collection of the national finances, we have, it is true, provided a multiplicity of new services since the War, covering every phase of the social life of our people, and amounting in the aggregate to the large figure of £490,000,000, part of which is raised by contributions by the people concerned themselves. This large sum of money collected and spent is the result of a much more formidable mechanism than any which existed in pre-war days, and has a more direct bearing on the life of the nation. The Chancellor of the Exchequer to-day is a much more important person than any Chancellor of the Exchequer of pre-war days. In his position he counts for much more than any single member on the Front Bench, and in his position he represents the most important officer of the State in this country. To a much greater degree than ever before he is the key to the structure of finance and industry.
Let me refer to the question of the Debt. In pre-war days the Debt stood at less than £700,000,000; to-day it has been multiplied ten times. Our National Debt to-day is ten times as much as it was before the War, and the very large increase in the Income Tax has almost always been balanced since the War by the amount paid in interest on the National Debt. While there are people who may be called upon to pay high rates of Income Tax and Surtax, the measures of collection in regard to Income Tax have always meant a balance between the amount paid as interest on the National Debt and the Income Tax. The right hon. Member for Epping (Mr. Churchill) endeavoured to fix the annual amount for interest and Sinking Fund at a figure of £350,000,000, and laid this down as a sound principle of national finance from which we should not depart. It was to be the permanent ratio of repayment from which we would not depart in any circumstances. That was sound finance in the highest degree. There was no anticipation of any reduction in the rate of interest, which was fixed at £300,000,000 and £50,000,000 for the repayment of debt. This sum of £350,000,000 was looked upon as a permanent feature of the future administration of the finances of the country. There has been a considerable change, and, in assessing the import of
this and previous Budgets, we must take into account the great changes which have taken place in the main features of the Budget. That £350,000,000, which was set aside for interest and repayment of debt, has been brought down to £224,000,000 in the present Budget. That means that the Chancellor of the Exchequer is relieved to the extent of £130,000,000 in his attempts to obtain revenue, he now requires £130,000,000 less than was deemed to be the minimum necessary by his predecessor of eight or ten years ago. He has been relieved of the burden of meeting that sum in respect of repayment of debt and interest and, therefore, he can well afford to claim generosity in the expansion of other services which have taken the place of these debt services.
But in addition to that problem of debt there is the foreign debt, which we have contracted, and by which the Lord President of the Council has committed this country definitely to the repayment annually for 62 years of a sum of about £35,000,000 in respect of a total debt of £2,200,000,000. That payment is not being made. The ethics of departing from a contractual obligation have been discussed. But the Chancellor finds himself in the fortunate position that he is no longer called upon to pay that amount. I know he can make the counter reply to me that amounts which came from reparation payments he has lost because of the default of other countries. The fact is that payments are not being made except token payments, which count for nothing. So that the Chancellor, compared with previous Chancellors, has been exceptionally fortunate in that he is no longer required to pay the sum contracted to be paid to America, and that his domestic charge for the repayment and interest on debt has been reduced by £130,000,000 in the same time.
The proportions of indirect and direct taxation are always a subject of great interest, and indeed are matters of vital interest to the people. We have not time to-night to deal with the subject, but an opportunity will be given on the detailed considerations of the Budget to consider the merits of this question. I ask the Chancellor to see whether it is
not possible for him to relieve industry from taxes. We are taxing industries very heavily. Although there was a concession made to industry in the Derating Bill of a few years ago, that relief has been replaced by import duties on raw materials and by other kinds of taxes, and industry may find itself embarrassed to an equal if not greater extent as a result of what is taking place. The principle to which we are obliged to submit is that the Chancellor will relieve industry as far as he can. The taxation of industry takes the form of tariffs on raw materials, and it is no consolation to the industry whose raw materials are raised in price to find that a neighbouring industry gets the benefit of a subsidy from the proceeds of a tariff put on industry No. 1. This attempt to balance one industry at the expense of another involves considerable danger. The Chancellor is a most powerful figure in all these arrangements, but I believe that he runs a very great risk indeed of having the whole fabric of British industry considerably weakened by the process to which I refer.
The question of the relation of the individual to the State and the relation of industry to the State needs to be viewed in a more comprehensive way with due thought of the result. I am not satisfied that the Budget shows any evidence of a viewing of the whole problem of British industry in that way. Wealth creation is of no value unless there is a system of distribution which engenders still greater creation and enables the country to become richer. The narrow view of obtaining from industry and from individuals sufficient proceeds to balance a Budget and to meet these claims from time to time, is not the larger view that we would like to see
.
I would like to ask a question about the Exchange Equalisation Fund. The right hon. Gentleman has referred to that fund with some pride—a pride which we cannot share because he does not confide in us. On more than one occasion when asked about the results of the fund he has said that it is going on all right, that we need not worry and that a profit can be shown on the fund. That is not an answer to the question. It may be possible to show a profit on a transaction of this kind, judged solely by
its direct results, but I am not at all happy about this fund. It is not sufficient to tell the House that this fund, skilfully manipulated, can show a profit. We cannot be satisfied unless we are able to trace the result of its operations and its incidence in relation to trade and employment and other factors of our national life represented in the Budget.
There is also the question of the sympathy or partiality of the Government towards the railways. We have had evidence of it on more than one occasion. A previous Chancellor declared his preference for the railways in plain terms. I think it was the right hon. Gentleman the Member for Epping (Mr. Churchill) when he was Chancellor or shortly after he ceased to occupy that office. We have another example in this Budget. I am not quarrelling with the withdrawal of the rebate on the duty on heavy fuel oils. I am not so sure that there is not some justification for it. There is a duty on petrol which stands at the figure of 8d. but the duty on heavy fuel oils was only ld. because a, rebate of 7d. was being granted. We know that the fuel value per gallon of heavy oils—now that new engines and new methods of combustion are in use—is greater than the fuel value per gallon of petrol and if we are justified in putting a duty of 8d. on petrol, I would say that we are equally justified in taxing heavy fuel oil and that we should tax it on fuel value and not on any particular degree of density or anything of that kind. I wish to know, however, whether this proposal is designed solely for that purpose or whether its purpose is to assist the railway in competition with the road. Our view of transport is that rail and road should be co-ordinated as one system and the results pooled for the benefit of the whole country. Here is a proposal by which road transport will be made more expensive, or at any rate by which the cheapening process will be retarded. Is that being done in order that the railways may have the advantage? What causes that suspicion is the tone of the Chancellor's remarks when he referred to the matter and the fact that the 8d. is not to be charged on the Diesel fuel used on the railways. Is it, the purpose of the Government to protect British industries against industries abroad, or are they going to take the part of one competitive
industry in this country against another? Are they taking steps by this Budget to interfere with natural competition and development?
Next, I wish to refer to the depressed areas. I would like to believe that the Government are giving their fullest attention to this problem. We heard this afternoon that a Royal Commission is to inquire into the possibility of merging Merthyr Tydvil with some other area. I do not know what is to happen to the Tyneside. If we understand the Government plan rightly the idea is that those areas should be merged in larger areas and that the responsibility for maintaining the depressed area of Merthyr is to be placed on the county of Glamorgan. I suggest to the Government that if those depressed areas are to have a chance of revival the Government ought to take the smaller and more compact area of Merthyr Tydvil and adopt it. Do not let it be thrown into Glamorgan to lower the average standard of rateability in that county. Let the Government see what they can do as an experiment in the revival of a, small area such as Merthyr Tydvil or Tyneside. Let them not entrust the duty in a vague and general way to the commissioners, but let them take on the job of trying to restore better conditions in a small compact area which is suffering heavily from unemployment and depression.
Is it now possible to have a. declaration from the Chancellor on the prospect of getting cheaper loans under the Public Works Loan Board for rural areas and small bodies that cannot otherwise borrow money? One of the things for which the Chancellor claims credit is that we have had cheap money for two or three years. These small areas, however, have not had the benefit of the cheap money and they are still paying high rates for their loans. I ask the Chancellor to give comfort to these local authorities by making provision in the Budget not only for a conversion to lower rates of interest, but for the extension of the annual borrowing figures to the position which they occupied before 1931, when the Economy Act was passed. The Chancellor has told us that he believed we were on the high road to prosperity and were 80 per cent. towards the end of the journey. I should like to know what he meant by prosperity. Does prosperity mean a precarious
balance on the edge of want and social disruption? It appears from what we hear from hon. Members speaking for the Government that they have no idea of any higher standard than a restoration to the standard of 1931 or 1929. We like to think that the Government want a much more generous life with more production balanced by ample consuming power for our people
The Chancellor is responsible for a host of economies. He is to be judged by the real economy that he achieves, and I should like to compare him with a housewife who is the model of economy in this and every other country —those people who achieve miracles with small sums each week. I like to believe that the Chancellor takes up his task not with the idea of balancing his Budget and getting a large surplus, but with seeing that every pound of money is spent in a way that will benefit not individuals in the form of miserable temporary concessions, but the larger growth of the nation as a whole. It has been said against the right hon. Gentleman, and he should not resent it, that he has been juggling again this year. I believe that he has been juggling very skilfully. We all like to see a juggler with a variety of articles changing their order and proportions from time to time, and we admire his skill. The Chancellor has been doing all that in the last three or four years. He has changed a little the order of the Income Tax and of the Import Duties, and has kept a stream of duties going to the great admiration of those who like to see him doing it, but we do not think it is safe. We would like to see the Chancellor look upon this country as a garden to be tended, where there is no static condition at all but where there is a constant procession of rebirth and growth. We would like to believe that of this Government, but it is rather too much to hope of them, because they and their supporters are too deeply committed to the policy of individualism and enterprise ever to develop the enterprise of communal effort.
We are in this national enterprise with the Members of the other side of the Committee, and when we appeal to them we do so in the larger national interest, because we believe that we can conceive a condition of plenty in this country and that if we have faith, we can abolish
poverty. The Budget is one of the important instruments towards that end. It is a national stocktaking when 20 per cent. of our income comes under our control for the time being. We can use this money to remove poverty from our country. Poverty exists here still in the midst of plenty. There is still plenty, but that plenty is small in comparison with the larger plenty there could be if we utilised all our resources. There is one surplus to which the Chancellor has not made any reference, but I hope it will not be lost sight of in the Committee. We have a surplus of more than 2,000,000 work-people, a surplus of producing power valued at no less than £400,000,000 a year, and our economies will not avail us if we balance only large sums of money collected from people in various circumstances of life and at the same time fail to make use of that surplus which could make our country really rich.

10.36 p.m.

Mr. CHAMBERLAIN: Although we have our fits of party acrimony in the House, there are certain customs, pleasing in themselves, which are now accepted as traditions. Among them is the habit of offering congratulations to the Chancellor of the day when he has passed through the ordeal of opening his Budget and complimenting him, if not upon the contents of the Budget, at least upon the manner of its presentation. That, perhaps, may be considered to be a matter of course, and yet on this occasion I must say that the congratulations which have been showered upon me from all parts of the House have seemed to me to have an extra touch of warmth and sincerity about them of which I am deeply appreciative. I should like to thank my hon. Friends behind me and below the Gangway on the opposite side for their approval of what the Budget contains, and I must not exclude from my gratitude the Members of the Opposition, who have with difficulty concealed their true feelings upon the Budget. When the hon. Member for Wednesbury (Mr. Banfield), in explaining the difficulties that he found in discovering anything vulnerable in the plan of the Budget, went so far as to compare the Chancellor of the Exchequer to a feather bed, then I did feel that the Opposition had gone as far as any reasonably self-respecting Opposition could go.
The hon. Member for Gower (Mr. D. Grenfell) complained that he could find no plan in the Budget. I wonder whether he looked very hard to see if there was a plan, because I should have thought that the plan of this Budget was so simple and so obvious that it could not escape anybody. The policy of the Government towards industry has been illustrated by their actions over the past three and a-half years, and the results of that policy are plain for any one to see. But to-day I have had to consider how I should distribute a surplus of which I found myself possessed without increasing taxation, in the way that was most fair and equitable among those who had in 1931 been subjected to the sacrifices and burdens that were then put upon them. I do not think there has really been any criticism from any quarter of the House as to the manner in which that surplus has been distributed in this Budget, but there has been, of course, some qualification of the general approval on broader lines. That criticism has sometimes taken the form of suggesting that I have been unduly pessimistic in my estimates of revenue, and, on the other hand, I have also been criticised because, it is said, I am pursuing unsound methods of finance in committing the country to liabilities for which I have provided insufficient revenue.
The critics on the ground of undue pessimism, represented by my right hon. and gallant Friend the Member for Ripon (Major Hills) and the hon. Member for Huddersfield (Mr. Mabane), certainly have been quite consistent in their attitude towards my administration in my present office. They have said that I was either too timid or not sufficiently bold in my Estimates, and the hon. Member for Huddersfield is shocked that I should have transferred to the Exchequer the balance of between 4,000,000 and £5,000,000 from the Road Fund when I could so easily have taken my pen and quickly written up the yield of Customs and Excise or Income Tax. Estimates of revenue in a coming year must always have an element of doubt about them. Even the best informed people must know that there are items upon which it is impossible to be certain, and judgment has to be exercised, therefore, as to the figure at which such items shall be put. I have
done a very valuable service to my right hon. Friend and to the hon. Member in this, that if I had taken their advice and the advice had proved to be incorrect, they would have been clearly shown to be false in their premises and mistaken in their conclusions, but, by steadily refusing year after year to listen to that advice, I have left them in the position that they can for ever go on asserting that it would have been very much better if they had been listened to, and nobody can ever prove them wrong.
One particular criticism directed towards my Budget has reference to the War Debt to the United States of America. I do not think anybody does a service to this country by suggesting that War Debt is exactly on the same footing as a commercial debt or a debt incurred by a Government for development purposes; nor do I think that it is wise for any of us to suggest that our debt has been repudiated. That, of course, is not the case. The use that was made of the suggestion, both yesterday and to-day was however, to criticise the balancing of the Budget. The hon. Member for Caerphilly (Mr. Morgan Jones) yesterday used an argument which amounted to this: If the Labour party had been judged by our standards, they would have made a very much better showing than they did because they—it was stated—had paid the sum—I think the hon. Member said—of £79,590,000 during their period of office to the United States, whereas the present Government had paid only £42,250,000. Of course, it is not £42,250,000, but £32,260,000 which has been paid by the present Government. The hon. Member, therefore, perhaps did an injustice to his own case. The hon. Member for Gower evidently had not entirely forgotten that point, but the other side still sought to bring against me the charge that I had balanced the Budget merely because I had made no provision for interest and sinking fund upon our debt.
The hon. Member for Caerphilly made a most unfortunate use of that illustration because, as a matter of fact, during the period of office of the Labour Government, when they paid that £79,590,000, they received £78,347,000 from Allied War Debts and Reparations, so that the net amount of cash which they had to find.
in their two and a quarter years of office was only £1,243,000. During our period of office we have had no receipts, and the payment of £32,260,000 was a net payment. Therefore, the figures show a result contrary to what the hon. Member supposes. But that is not the whole story. We have to add to that the fact that there were interest payments on the Dominion War Debts and various Relief Debts made to this country in the time of the Labour Government's Budgets. amounting to £25,500,000 in two and a quarter years. We have only received £1,500,000 from those sources during our period of office. So they were £24,250,000 up, and we were £30,750,000 down. On the whole, therefore, adding the two together, the Labour Government were £55,000,000 better off than we are.
I come now to another argument which was used by the right hon. Gentleman the Member for Darwen (Sir H. Samuel) yesterday, and was repeated to-day by the hon. Member for Limehouse (Mr. Attlee). They said that I had made concessions this year which next year would cost a great deal more than they would this year, but that I had only provided £3,000,000 of revenue to meet them, and that the difference between the £3,000,000 and the £18,000,000 that they would cost next year was entirely left out of account. I hope I can justify my action without losing that reputation for respectability with which the hon. Member for Lime-house was good enough to credit me. Of course, the figure of £18,000,000 quoted by the right hon. Gentleman was a gross figure, and I think that at the moment he left out of account the fact that there were other matters which will give a larger yield next year than this year, and which can be set off against the extra cost of these concessions.
The right hon. Gentleman also included the sum of £2,530,000 repaid to the Exchequer from the Road Fund. As a repayment of debt, it is, of course, as the right hon. Gentleman correctly stated, a non-recurring item. But the heading "Miscellaneous Revenue" which appears in all our Budgets always contains items of that kind, and I think it is perfectly right, and consistent with the ordinary practice, that these small repayments of loans, made originally out of current revenue, should be counted in as part of
the revenue of the year, because there are always receipts of that kind every year.
Apart from that, let us see what the extra cost of the concessions next year is. There is an extra £1,500,000 for the restoration of cuts; £5,500,000 for Income Tax allowances, and the net extra on Customs and Excise will be £250,000. That makes £7,250,000, and we are providing this year £4,470,000 from the Road Fund, which again is a non-recurring item. That makes altogether £11,720,000.
But surely the right hon. Gentleman does not think that I would commit the country to a liability of that kind if I did not see clearly that we were going to have the revenue next year to meet it. I do not know whether he has taken into account the fact that, even supposing that the profits and income of 1935 are no larger than those of 1934, there will still be a sufficient increase in the revenue from Income Tax to cover the whole of the extra cost of Income Tax allowances next year. But, of course, we need not stop there. The trend of business is upwards at the present time, and incomes are not standing still; they are still rising. Therefore, we may count upon an increased revenue next year from Income Tax. And I would remind the right hon. Gentleman that the lag in the Surtax which I mentioned in my Budget speech will be overtaken next year, and will then give the same sort of benefit from Surtax as we arc having from Income Tax this year. Taking that into account, I think we may clearly and with certainty say that we can even now see a sufficient extra income coming from Inland Revenue next year to cover the extra cost of the concessions which have been made this year.
The right hon. Gentleman, as usual, was rather pessimistic in his view. He takes exception to what he calls the persistent ignoring of the depreciation of currency in congratulating ourselves upon the increase in exports. He says that the pound is depreciated by 12 per cent. and that it is the depreciation of our currency which has caused what he calls the spurt in exports which amounted to nearly £30,000,000 last year.

Sir H. SAMUEL: The recent spurt

Mr. CHAMBERLAIN: That is a rather bigger spurt than last year. Let us
analyse the increase in exports last year. It amounted to £28,000,000, or 7½ per cent. over the preceding year. Take, first of all, the countries in the gold bloc, including Germany and the United States. They took from us £98,000,000 in exports in 1933, and in 1934 the exports were only £94,600,000, so that actual exports to those countries had not increased but diminished by £3,400,000. Then take the foreign countries in the sterling bloc and on an independent currency. Their imports from us in 1934 were £115,800,000 against £106,400,000 in 1933. So that the increase there was £9,400,000—an increase of 9 per cent. In Empire countries the exports in 1934 were£185,600,000,and in 1933, £163,500,000, an increase of £22,000,000, or 13½ per cent. If we take the countries divided up into those sections, it is the countries that are linked to sterling, and particularly Empire countries which have shown the greatest capacity to buy more goods from us.
It is no use to tell us that the pound has depreciated in value, because the pound to-day will buy more than the gold pound did several years ago. The hon. Member for East Edinburgh (Mr. Mason) argued that if we had remained on gold, prices would be much lower and hardships would not have fallen on the poor. He may remember that whereas the cost of living to-day is at 139, when the Government came into office it was 147:½, and all the reports we get from people who visit the countries on the gold bloc show that the difference in the cost of living is very great.
With regard to the question the right hon. Gentleman put to me about the Exchange Equalisation Account, it is of course, impossible for me to give him details. The purpose of the Account is not to make a profit but to carry out certain operations to preserve the stability of sterling against those fluctuations, speculative and otherwise, which cause so much uncertainty to trade. From time to time, in order to alleviate any existing uncertainty, or sometimes to correct false rumours, I have told the House as a matter of fact that the fund showed a profit at the time.
The hon. Member for Gorbals (Mr. Buchanan) put a question about Newfoundland. I know nothing at all about the statements which appeared in a paper
this morning. I have not the slightest doubt that the right hon. Gentleman the Secretary of State for the Dominions has already made inquiries. The Newfoundland Act provided that the Treasury here could make provision for a deficit in the Newfoundland Budget, including the cost of administration, and, if it were found necessary to increase the amount of relief which is being given in Newfoundland, and that increased the deficit, that deficit could be made good according to the Newfoundland Act.
I have not the time to spend upon any further matters that have been raised, but as we shall have further opportunities at different stages for discussing the items in the Budget, I should like to make this general observation. I think that it is a mistake to take too pessimistic a view of the returns that may be derived from Inland Revenue in the future. There have been speeches made in the course of the Debate in which attention has been drawn to the fact that we have, as, undoubtedly we have, reached very nearly the limit of productivity of these taxes, and, of course, when you have Income Tax and Surtax running up to 12s. 9d. in the £ and Estate Duties up to 50 per cent., it is quite obvious that you cannot expect to get much more from them, certainly not by raising the rates. On the other hand, let it be remembered that we still have a long way to go before we get back to the foreign trade of only a few years ago, and that, as trade continues to expand, so we may expect a considerable further yield from these taxes as they stand to-day. Even though the increased activity of trade should reduce, to some extent, the value of gilt-edged securities, that will be, in its turn, compensated by the increased value of industrial shares which form quite a considerable part of the wealth on which those taxes are levied.
It is true that there is nothing in this Budget provided for the unemployed, but the best service that we can render to the unemployed is to make the country more prosperous, for it is only by making the country more prosperous that we shall have the resources which are necessary still further to mitigate their lot. I need hardly say that the efforts of the Government will be directed towards the
end of making the country more prosperous than it is to-day. To-day you have seen the picture of 80 per cent. prosperity. I have been asked, "What is the picture of 100 per cent. prosperity?" My reply is, "Keep this Government in office a little longer and you will see."

Question,
That it is expedient to amend the law relating to National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with finance,
put, and agreed to.

Orders of the Day — TRANSFER OF SUM FROM ROAD FUND TO THE EXCHEQUER.

Resolved,
That the sum of four million four hundred and seventy thousand pounds shall be transferred from the Road Fund to the Exchequer.
—[Mr. Chamberlain.]

Resolutions to be reported upon Monday, 29th April; Committee to sit again To-morrow.

The remaining Orders were read, and postponed.

ALLOTMENTS, BRISTOL (HOUSING SCHEME).

Motion made, and Question proposed, "That this House do now adjourn."—[Captain Margesson.]

11.0 p.m.

Mr. NOEL LINDSAY: I apologise for detaining the House for a few minutes, but I desire to raise a question, of which I gave notice, relating to certain land in South Liberty Lane, Bedminster, Bristol. It is an area 50 acres in extent in one of the less attractive parts of my constituency. A few years ago it presented a very dismal picture, bounded on one side by the main line of the Great Western Railway Company and on the other by factories, tanneries and other industrial premises. It is low-lying land, smoky, dirty and subject to occasional floods. Two or three years ago 37 acres of this land was let upon lease to the Unemployed Welfare Association of the City of Bristol, a voluntary body catering for the welfare of the unemployed. Since that time £1,000 or
more, money raised by public subscription from charitably disposed persons, has been spent on draining the land, and a great deal of work has been put in by the unemployed men themselves and by voluntary helpers. Over 300 unemployed men are provided there with allotments. Each allotment has its own hut, very well ordered and very well cared for. There is a general canteen for the use of the men, at which we are able to obtain produce at low rates. Indeed, the whole of the land has been turned into a flourishing and happy community, doing really useful work for the good of the unemployed men in my constituency. Some months ago it was honoured by a visit from the Prince of Wales, who expressed himself in very high terms of commendation of the work that was being done there.
The land was only let upon lease, and recently the freehold was sold by the owner to the Northville Building Company for the purpose of building. I make no complaint whatever about the action of the company or its proprietor. He has acted merely upon ordinary business lines, and no complaint whatever can be made of his action in purchasing the land. The land was at the time of the purchase scheduled, under a town planning resolution passed by the Bristol City Council, for industrial purposes, industrial purposes being in conformity with the general nature of the district. I must admit at once that it was perhaps a little short-sighted of the Bristol City Council to schedule that land for industrial and not for allotment purposes, and I think they realise that that is so, because there has for some time been a discussion going on about the desirability of altering the nature of the zone and of turning the land from industrial to allotment purposes. In answer to a supplementary question by the hon. Member for Bristol North (Mr. Bernays), the other day, the Minister said that this was a matter of a private owner being allowed to do what he liked with his own land. I would remind the Parliamentary Secretary to the Ministry of Health that when the land was purchased it had already been scheduled for industrial purposes. If he will look at the notes of the public inquiry he will see that the representative of the Company, Mr. Jennings, stated that he knew at the time of the purchase that the land had been scheduled but he
took the risk because the whole question of town planning is so risky and one never knows from day to day what is happening.
The company appealed against the classification of this land in the schedule, and the appeal was heard by one of the Ministry's inspectors. The inspector no doubt made his report to the Minister and on that report the Minister allowed the appeal and turned the classification of the land from industrial land to housing land, with the result that during the next few months these men will be turned off their allotments and the land will be used for the purposes of housing. I have rarely known any decision of a Government Department which has created so much spontaneous feeling in the city of Bristol as this decision. I am the last man to raise a matter merely because there is public feeling in my constituency, but in this case I happen entirely to sympathise with the general feeling in my part of the world. As the Minister knows, not only has the holdings committee of the corporation passed a resolution, but the whole city could themselves have passed, without a single dissenting voice, a resolution protesting against the decision of the Minister, which has been forwarded to him. I could tell him of dozens of private representations by persons and bodies of all sorts protesting against this decision.
The feeling is based upon four different lines. First of all, if this sort of decision is to be taken, it makes nonsense of the whole principle of town planning. That is the official point of view. What I may call the more general public point of view is that this decision ignores the need for allotments. I see the hon. Member for West Nottingham (Mr. Caporn) here. He has been engaged in a discussion with the Minister on the question of allotments. There has recently appeared in the public Press a letter which the Minister wrote to him on this question, from which I quote the following:
The Minister is, of course, well aware of the importance of the allotment movement and its particular value to unemployed persons. He is therefore very careful to see that there is no improper interference with allotments.
What is true for Nottingham surely ought to be true for Bristol also, and if allotments are important for the unemployed men in Nottingham, they are equally important to the unemployed men
in Bristol. The third reason which has caused this unparalleled outcry is that no official person in Bristol can understand what reasons can have actuated the inspector. The city engineer, the medical officer of health, and everyone who has had the opportunity of examining this matter agrees that while this is an admirable site for allotments and might even be used at a pinch for industrial purposes, it is of all the undeveloped sites there the least suitable for housing. If I could take the Minister down with me next week-end, I am sure he himself would agree that it is most unsuitable for housing purposes.
Finally, there is the general feeling, of sympathy and that it would be most unfortunate if these men, who have spent a great deal of energy, trouble, and labour upon building up their own allotments and have, by means of this grant, been given useful, interesting, and healthy work to do, should be displaced for the sake of building a few more houses. The Minister knows the interest which I have taken in the question of housing, and I pay him a great tribute for his desire to promote the housing of the working classes. I congratulate him upon the great strides which his Department has made in the last few months. The houses which will be built upon this land, if this proposal is carried through, are not ordinary working-class houses at all; they are houses which will be for sale and not to let, houses which will be beyond the pocket of the ordinary working-class man. Bristol has a very great record. It is not a matter of vital importance to the city that these 37 acres should be turned into a fresh road of villas for men who can afford to pay £500, £600, or £700 cash for a house. There are plenty of other sites available for houses in Bristol, hut there is no other site available for allotments of this sort.
I have every sympathy with the Minister's desire to score a record bag of houses but he can do that without dispossessing these 350 unemployed men. I do not desire to use intemperate or hasty language. I appreciate that he has had a very difficult decision to make, and I dare say he has felt that the balance has fallen on the side on which he eventually decided, but I do ask him if, in view of the serious local feeling in this matter and the really genuine hardship which will be caused to 300 or 350
unemployed men, he cannot reconsider this decision and disallow the appeal against the unanimous decision of the Bristol City Council. If he feels that his statutory responsibilities prevent him from reconsidering his present decision, then I do ask him if he cannot make some other sort of proposal, if he cannot put before us some suggestion whereby the city council, voluntary workers—those of us who are interested in the welfare of the unemployed—can work together in order to secure the preservation of this land.

11.12.p.m

Mr. BERNAYS: I desire very briefly, but very emphatically, to associate myself with the remarks of my hon. Friend. It is a question, of course, that directly concerns his constituency, but he will agree with me that it concerns, as well, the whole of Bristol. The decision with regard to the allotments was given entirely against the weight of local opinion and I would just quote one or two important local authorities who have given their opinion on this question. There is the town clerk of Bristol, who said with regard to this use of these allotments for housing purposes:
We regard the land as entirely unsuitable for the erection of dwelling-houses and in our submission it is difficult to imagine a more unsatisfactory place in which to expect people to live. If town planning meant anything it would never authorise the use of such land as this for dwellings.
There is the opinion of the Bristol city engineer, who said:
I am absolutely satisfied that the land is not suitable for dwellings.
There is the opinion of the medical officer of Bristol, perhaps the most important of all, and at least the Ministry of Health should give some weight to the opinion of the medical officer. This is what he says:
I do not know of any undeveloped site in Bristol that is less desirable for housing purposes.
That is a very formidable opinion. I suggest that the opinions of the town clerk, of the city engineer and of the medical officer present a very formidable trinity of local opinion. I fully recognise, with my hon. Friend the Member for South Bristol (Mr. N. Lindsay), the zeal of the Under-Secretary with regard to housing, and I think the whole House
recognises the tremendous efforts he has made in that direction; but in the opinion of the local experts in Bristol there are alternative sites for housing. I would venture on one other quotation. I would read an extract from the town clerk's letter to the Ministry of Health dated 19th October, in which he says:
The council were of opinion that there was plenty of other land available for building purposes in this part of the city, and that such land would be more suitable. The site in question"—
that is the allotment site—
is low-lying, no sewer is available; the site is very near a large brick earth quarry, which is used as a tip which is usually burning; and there is also a large colliery spoil heap opposite the site. This land is very unsuitable for residential purposes.
The Parliamentary Secretary, I have no doubt, will lay stress on the report of the medical inspector of the Department, who visited the site, I understand, on a. most unfortunate day, after a long dry spell, when the land, which is usually water-logged, happened to be dry. It was also at a time when the wind was blowing in an unusual direction, and the fumes of the brick quarry were not in evidence. I suggest that his report, although as impartial as he could make it, was not based on the facts as they are known to those who live in Bristol. The Parliamentary Secretary may say that we should have approached him earlier in the matter. The local authority, knowing the condition of the site, had no idea that the Ministry of Health would allow buildings to be erected upon it. I know the kind of letter we should have received from the Parliamentary Secretary, a most charming and courteous letter, but telling us that the matter was sub judice and that he could make no comments on it.
But surely it was incumbent upon the Minister of Health, knowing that there was strong local opinion against this use of the site, to consult the Members of Parliament for Bristol, or to consult again the local authority before coming to a final decision. This decision makes the whole position of town planning decisions a farce. I agree that the Minister of Health must have an over-riding power in regard to town planning decisions of a local authority, but I suggest that it should be used very sparingly and with the utmost caution. Our contention is that in this case this over-
riding power has been used wantonly and ill-advisedly against the overwhelming weight of the evidence.

11.18 p.m.

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): The hon. Member for South Bristol (Mr. N. Lindsay) and the hon. Member for North Bristol (Mr. Bernays) have raised one of those difficult cases in which the Minister of Health is called in to adjudicate between the right of a developer and the desire of a council to preserve a certain character of planning. The position is broadly as stated. This site of some 37 acres was part of a site in respect of which a resolution to plan had been passed by the council in 1929, but when a resolution to plan has been passed the decision is not final. The council then got down to the business of drawing up a complete scheme. That scheme is now being considered but it has not been considered by the Minister, and between the time of a resolution to plan being passed and the scheme it frequently happens that councils change their intention as regards a particular zone. What Parliament has said in the Act is that once a resolution has been passed, a developer develops at his own risk unless he consults the council to find out what is their probable intention in respect to any zone. This company has at its head a well-known builder, a man who has built 3,000 houses and is a well-known man in the building trade and is an ex-president of the National Federation. Being in possession of this particular site he applied to the council to build some 500 houses of between £380 and £500 each. He was informed that his application was refused on the ground that this particular area would be reserved for industrial purposes. That being so, he exercised his right of appeal to the Ministry, the right of appeal which is given by Parliament; and I suggest that, when Parliament gives a right of appeal against what is at that stage a rather fluid position of the council, it is nonsense to say that we are making nonsense of town planning.
The claim of the council on the one side was that this area should be reserved for industrial purposes, and the claim of the developer was that this was a. good site for the building of working-class houses. The question of allotments was never
considered. Indeed, it was never submitted by the council. I believe at one time that it was suggested this land could be kept as an area zoned for allotments. But the issue we had to decide was whether this zone should be kept for industrial purposes or whether we should allow it to be used for working-class houses. That is the narrow issue. I do not intend to argue the merits of it again. The hon. Member for North Bristol (Mr. Bernays) said I might say this or that, but I will say neither. An inquiry was held. The hon. Member for North Bristol has quoted evidence on one side, and I could equally quote evidence on the other side.

Mr. BERNAYS: Local witnesses.

Mr. SHAKESPEARE: The object of holding an inquiry is to consider the whole merits of a case, and on which side the balance of advantage lies. We came to the conclusion that on balance, in view of the fact that there had been no industrial development in this area for some years, in view of the fact that some 300 or 400 acres in Bristol would be scheduled under a scheme for industrial purposes; in view of the acute shortage of small houses in this area—there being, with the exception of a small row, no houses within half a mile—and in view of the desire of workers to live near their work—for all these reasons we came to the conclusion that we could not properly refuse permission for development and building of working-class houses. I admit that the site is not an ideal one, but it is no worse than a site recently acquired by the council. In some particulars it is better, and in some worse. But it was not so bad as to justify refusal of development.
I appreciate that there is another question in this issue, and it is a big one. Whether this particular site is reserved for industrial purposes or for residential purposes the ultimate fate of the allotment holders will be the same. They are on a yearly tenancy. Had we been asked to consider the question of allotments, very different considerations would have entered our minds. My hon. Friend, raising, as he always does, questions which vitally concern his constituency, wants to know what can now be done in view of the turning of public opinion into a rather different channel which was never raised at the inquiry. I agree
it is a hardship that these 350 unemployed men should, after the labour they have spent on the soil, be turned out. The position is this. If public opinion in Bristol demands that this land should be kept for allotments, if that is the decision of the council, then their course is clear. They should at once approach the developer. They could either acquire the land from him and keep it for allotments or they could change their scheme, which is still fluid at this stage, and zone the area for allotment purposes. I understand that the builder, Mr. Jennings, is a generous supporter of allotments and of the Unemployed Welfare Association and if an approach were made to him in a friendly spirit, I cannot imagine that he
would not consider the representations made to him, very sympathetically. That may be the outcome of this short discussion. I claim that, on the main issue, we could not have done other than we did. Now that the broader question has been raised, it may be that the council will be able to find land elsewhere but, if they cannot do so, they should immediately approach the developer if it is the unanimous wish that this land should be zoned for allotment purposes. Justice may thereby be done.

Question put, and agreed to.

Adjourned accordingly at Twenty-Seven minutes after Eleven o'Clock.